Best 3 Yielding Buy-Rated Stocks: TCAP, SUNS, PFLT

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 which could 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."

Triangle Capital Corporation

Dividend Yield: 8.30%

Triangle Capital Corporation (NYSE: TCAP) shares currently have a dividend yield of 8.30%.

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. The company has a P/E ratio of 11.74.

The average volume for Triangle Capital Corporation has been 199,300 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $722.8 million and is part of the financial services industry. Shares are down 5.4% year-to-date as of the close of trading on Thursday.

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, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 16.6%. 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. Compared to other companies in the Capital Markets industry and the overall market, TRIANGLE CAPITAL CORP's return on equity exceeds that of both the industry average and 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 124.49%.
  • The gross profit margin for TRIANGLE CAPITAL CORP is currently very high, coming in at 79.77%. Regardless of TCAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCAP's net profit margin of 84.83% significantly outperformed against the industry.

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

Solar Senior Capital

Dividend Yield: 8.20%

Solar Senior Capital (NASDAQ: SUNS) shares currently have a dividend yield of 8.20%.

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. The company has a P/E ratio of 15.75.

The average volume for Solar Senior Capital has been 47,000 shares per day over the past 30 days. Solar Senior Capital has a market cap of $197.3 million and is part of the financial services industry. Shares are down 6.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Solar Senior Capital as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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 645.0% when compared to the same quarter one year prior, rising from $0.76 million to $5.63 million.
  • The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 72.43%. Regardless of SUNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SUNS's net profit margin of 99.48% significantly outperformed against the industry.
  • SOLAR SENIOR CAPITAL LTD reported significant earnings per share improvement 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, SOLAR SENIOR CAPITAL LTD reported lower earnings of $1.11 versus $1.46 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $1.11).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.6%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SUNS has underperformed the S&P 500 Index, declining 6.54% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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

PennantPark Floating Rate Capital

Dividend Yield: 7.80%

PennantPark Floating Rate Capital (NASDAQ: PFLT) shares currently have a dividend yield of 7.80%.

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. The company has a P/E ratio of 9.81.

The average volume for PennantPark Floating Rate Capital has been 75,600 shares per day over the past 30 days. PennantPark Floating Rate Capital has a market cap of $205.9 million and is part of the financial services industry. Shares are up 0.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates PennantPark Floating Rate Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • PFLT's very impressive revenue growth greatly exceeded the industry average of 16.6%. Since the same quarter one year prior, revenues leaped by 72.7%. 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 243.2% when compared to the same quarter one year prior, rising from $1.77 million to $6.06 million.
  • The gross profit margin for PENNANTPARK FLOATING RT CAP is rather high; currently it is at 57.92%. Regardless of PFLT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PFLT's net profit margin of 88.50% significantly outperformed against the industry.
  • PENNANTPARK FLOATING RT CAP reported significant earnings per share improvement 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, PENNANTPARK FLOATING RT CAP reported lower earnings of $1.30 versus $1.75 in the prior year. For the next year, the market is expecting a contraction of 16.1% in earnings ($1.09 versus $1.30).
  • In its most recent trading session, PFLT 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. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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