While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends and subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 5 stocks with substantial yields, that ultimately, we have rated "Buy." Full Circle Capital (NASDAQ: FULL) shares currently have a dividend yield of 11.00%. Full Circle Capital Corporation is a business development company and operates as an externally managed non-diversified closed-end management investment company. The company has a P/E ratio of 15.54. The average volume for Full Circle Capital has been 46,500 shares per day over the past 30 days. Full Circle Capital has a market cap of $63.5 million and is part of the financial services industry. Shares are up 12.9% year to date as of the close of trading on Monday. TheStreet Ratings rates Full Circle Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results. Highlights from the ratings report include:
- FULL's very impressive revenue growth greatly exceeded the industry average of 12.3%. Since the same quarter one year prior, revenues leaped by 437.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FULL CIRCLE CAPITAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FULL CIRCLE CAPITAL CORP increased its bottom line by earning $0.52 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.52).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 365.5% when compared to the same quarter one year prior, rising from -$0.70 million to $1.85 million.
- The gross profit margin for FULL CIRCLE CAPITAL CORP is rather high; currently it is at 65.40%. It has increased significantly from the same period last year. Along with this, the net profit margin of 48.53% significantly outperformed against the industry average.
- You can view the full Full Circle Capital Ratings Report.