Buy-Rated Dividend Stocks In The Top 3: OLP, TCRD, NMFC

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

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 3 stocks with substantial yields, that ultimately, we have rated "Buy."

One Liberty Properties

Dividend Yield: 7.10%

One Liberty Properties (NYSE: OLP) shares currently have a dividend yield of 7.10%.

One Liberty Properties, Inc., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of commercial real estate properties in the United States. The company has a P/E ratio of 18.86.

The average volume for One Liberty Properties has been 34,800 shares per day over the past 30 days. One Liberty Properties has a market cap of $324.6 million and is part of the real estate industry. Shares are up 3.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates One Liberty Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • OLP's revenue growth has slightly outpaced the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 15.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $6.46 million or 27.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.56%.
  • The gross profit margin for ONE LIBERTY PROPERTIES INC is rather high; currently it is at 51.88%. Regardless of OLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OLP's net profit margin of 24.06% compares favorably to the industry average.
  • ONE LIBERTY PROPERTIES INC reported flat earnings per share in the most recent quarter. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, ONE LIBERTY PROPERTIES INC's EPS of $0.80 remained unchanged from the prior years' EPS of $0.80.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

THL Credit

Dividend Yield: 8.30%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 8.30%.

THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. The company has a P/E ratio of 11.24.

The average volume for THL Credit has been 201,900 shares per day over the past 30 days. THL Credit has a market cap of $552.7 million and is part of the financial services industry. Shares are down 0.8% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates THL Credit as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 33.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 69.02%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 40.69% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 25.8% when compared to the same quarter one year prior, rising from $6.17 million to $7.76 million.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • THL CREDIT INC's earnings per share declined by 23.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, THL CREDIT INC increased its bottom line by earning $1.26 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $1.26).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

New Mountain Finance

Dividend Yield: 9.10%

New Mountain Finance (NYSE: NMFC) shares currently have a dividend yield of 9.10%.

New Mountain Finance Corporation operates as a closed-end, non-diversified management investment company. The company has a P/E ratio of 8.08.

The average volume for New Mountain Finance has been 334,700 shares per day over the past 30 days. New Mountain Finance has a market cap of $671.5 million and is part of the financial services industry. Shares are down 0.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates New Mountain Finance as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 61.45%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 79.39% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 175.55% to $63.21 million when compared to the same quarter last year. Despite an increase in cash flow of 175.55%, NEW MOUNTAIN FINANCE CORP is still growing at a significantly lower rate than the industry average of 267.67%.
  • In its most recent trading session, NMFC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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