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 (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 213,900 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $726.2 million and is part of the financial services industry. Shares are down 6.3% year-to-date as of the close of trading on Monday. TheStreet Ratings rates Triangle Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. 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 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 gross profit margin for TRIANGLE CAPITAL CORP is currently very high, coming in at 83.63%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 80.81% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 75.61% to -$12.28 million when compared to the same quarter last year. Despite an increase in cash flow, TRIANGLE CAPITAL CORP's cash flow growth rate is still lower than the industry average growth rate of 93.28%.
- The net income growth from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income increased by 14.0% when compared to the same quarter one year prior, going from $15.59 million to $17.77 million.
- TRIANGLE CAPITAL CORP has improved earnings per share by 12.3% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, TRIANGLE CAPITAL CORP increased its bottom line by earning $2.94 versus $2.23 in the prior year. For the next year, the market is expecting a contraction of 25.9% in earnings ($2.18 versus $2.94).
- You can view the full Triangle Capital Corporation Ratings Report.
- The revenue growth greatly exceeded the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 27.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CRT 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 8.82, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $3.27 million to $4.16 million.
- The gross profit margin for CROSS TIMBERS ROYALTY TRUST is currently very high, coming in at 100.00%. CRT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, CRT's net profit margin of 98.50% 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.
- You can view the full Cross Timbers Royalty Ratings Report.
- The revenue growth came in higher than the industry average of 14.1%. Since the same quarter one year prior, revenues rose by 24.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- UAN's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.49, which clearly demonstrates the ability to cover short-term cash needs.
- 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. When compared to other companies in the Chemicals industry and the overall market, CVR PARTNERS LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 49.85% is the gross profit margin for CVR PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.14% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 273.10% to $32.49 million when compared to the same quarter last year. In addition, CVR PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 13.35%.
- You can view the full CVR Partners Ratings Report.
- Our dividend calendar.