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." BlackRock Kelso Capital Corporation (NASDAQ: BKCC) shares currently have a dividend yield of 11.00%. BlackRock Kelso Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm invests in all industries. The company has a P/E ratio of 11.51. The average volume for BlackRock Kelso Capital Corporation has been 401,400 shares per day over the past 30 days. BlackRock Kelso Capital Corporation has a market cap of $702.4 million and is part of the financial services industry. Shares are up 1.2% year-to-date as of the close of trading on Friday. TheStreet Ratings rates BlackRock Kelso Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, expanding profit margins, growth in earnings per share 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 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 38.5% when compared to the same quarter one year prior, rising from $14.33 million to $19.84 million.
- 47.47% is the gross profit margin for BLACKROCK KELSO CAPITAL CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, BKCC's net profit margin of 63.23% significantly outperformed against the industry.
- 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. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, BLACKROCK KELSO CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- BLACKROCK KELSO CAPITAL CORP has improved earnings per share by 36.8% 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, BLACKROCK KELSO CAPITAL CORP reported lower earnings of $0.78 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.78).
- You can view the full BlackRock Kelso Capital Corporation Ratings Report.
- TICC's very impressive revenue growth greatly exceeded the industry average of 17.1%. Since the same quarter one year prior, revenues leaped by 76.0%. 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 TICC CAPITAL CORP is rather high; currently it is at 62.72%. It has increased significantly from the same period last year. Along with this, the net profit margin of 85.93% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to -$34.57 million or 9.09% when compared to the same quarter last year. In addition, TICC CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -113.53%.
- TICC CAPITAL CORP's earnings per share declined by 41.4% in the most recent quarter compared to 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, TICC CAPITAL CORP increased its bottom line by earning $1.77 versus $0.44 in the prior year. For the next year, the market is expecting a contraction of 40.7% in earnings ($1.05 versus $1.77).
- You can view the full TICC Capital Ratings Report.
- The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DMLP 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 17.75, which clearly demonstrates the ability to cover short-term cash needs.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, DORCHESTER MINERALS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for DORCHESTER MINERALS -LP is currently very high, coming in at 91.85%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.38% significantly outperformed against the industry average.
- Net operating cash flow has increased to $14.83 million or 28.47% when compared to the same quarter last year. In addition, DORCHESTER MINERALS -LP has also vastly surpassed the industry average cash flow growth rate of -50.31%.
- You can view the full Dorchester Minerals L.P Ratings Report.
- Our dividend calendar.