Top 5 Yielding Buy-Rated Stocks: SBR, KCAP, MCC, GAIN, TCAP

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

Sabine Royalty

Dividend Yield: 8.70%

Sabine Royalty (NYSE: SBR) shares currently have a dividend yield of 8.70%.

Sabine Royalty Trust holds royalty and mineral interests in various oil and gas properties in the United States. The company has a P/E ratio of 12.90.

The average volume for Sabine Royalty has been 15,400 shares per day over the past 30 days. Sabine Royalty has a market cap of $727.9 million and is part of the financial services industry. Shares are down 1.3% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Sabine Royalty as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 39.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.60, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 41.2% when compared to the same quarter one year prior, rising from $11.92 million to $16.83 million.
  • The gross profit margin for SABINE ROYALTY TRUST is currently very high, coming in at 100.00%. SBR has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, SBR's net profit margin of 97.59% significantly outperformed against the industry.
  • 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.

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

KCAP Financial

Dividend Yield: 12.20%

KCAP Financial (NASDAQ: KCAP) shares currently have a dividend yield of 12.20%.

KCAP Financial, Inc. is a private equity and venture capital firm specializing in mid market, buyouts, and mezzanine investments. It focuses on mature and middle market companies. The company has a P/E ratio of 8.17.

The average volume for KCAP Financial has been 214,400 shares per day over the past 30 days. KCAP Financial has a market cap of $272.3 million and is part of the financial services industry. Shares are down 0.6% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates KCAP Financial as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, notable return on equity and expanding profit margins. 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 greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 22.1%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, KCAP FINANCIAL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • KCAP FINANCIAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KCAP FINANCIAL INC increased its bottom line by earning $0.91 versus $0.32 in the prior year. This year, the market expects earnings to be in line with last year ($0.91 versus $0.91).
  • The gross profit margin for KCAP FINANCIAL INC is currently very high, coming in at 82.83%. Regardless of KCAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KCAP's net profit margin of -0.73% significantly underperformed when compared to the industry average.

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

Medley Capital

Dividend Yield: 10.10%

Medley Capital (NYSE: MCC) shares currently have a dividend yield of 10.10%.

Medley Capital Corporation is a business development company. The fund seeks to invest in privately negotiated debt and equity securities of small and middle market companies. The company has a P/E ratio of 11.32.

The average volume for Medley Capital has been 315,500 shares per day over the past 30 days. Medley Capital has a market cap of $591.7 million and is part of the financial services industry. Shares are up 3.7% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Medley Capital 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, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • MCC's very impressive revenue growth greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues leaped by 95.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MEDLEY CAPITAL CORP has improved earnings per share by 16.2% 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, MEDLEY CAPITAL CORP increased its bottom line by earning $1.32 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.32).
  • 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 106.1% when compared to the same quarter one year prior, rising from $7.34 million to $15.13 million.
  • The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 67.42%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.05% significantly outperformed against the industry average.

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

Gladstone Investment Corporation

Dividend Yield: 8.60%

Gladstone Investment Corporation (NASDAQ: GAIN) shares currently have a dividend yield of 8.60%.

Gladstone Investment Corporation is a business development company specializing in buyout, recapitalization, and changes in control investments. The company has a P/E ratio of 7.07.

The average volume for Gladstone Investment Corporation has been 260,700 shares per day over the past 30 days. Gladstone Investment Corporation has a market cap of $220.8 million and is part of the financial services industry. Shares are up 1.6% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Gladstone Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, compelling growth in net income, expanding profit margins and good cash flow from operations. 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:
  • GAIN's very impressive revenue growth greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues leaped by 62.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 4344.0% when compared to the same quarter one year prior, rising from -$0.35 million to $14.94 million.
  • The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 68.60%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 131.51% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 179.43% to $33.90 million when compared to the same quarter last year. Despite an increase in cash flow of 179.43%, GLADSTONE INVESTMENT CORP/DE is still growing at a significantly lower rate than the industry average of 255.90%.

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

Triangle Capital Corporation

Dividend Yield: 7.80%

Triangle Capital Corporation (NYSE: TCAP) shares currently have a dividend yield of 7.80%.

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. The company has a P/E ratio of 11.94.

The average volume for Triangle Capital Corporation has been 150,400 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $767.0 million and is part of the financial services industry. Shares are down 1.7% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Triangle Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Capital Markets industry and the overall market, TRIANGLE CAPITAL CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 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 42.8% when compared to the same quarter one year prior, rising from $16.23 million to $23.17 million.
  • Net operating cash flow has significantly increased by 411.34% to $45.42 million when compared to the same quarter last year. In addition, TRIANGLE CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of 255.90%.

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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