Don't Miss Out: Top 3 Yielding Buy-Rated Stocks: GBDC, QRE, MEMP

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."

Golub Capital BDC

Dividend Yield: 7.40%

Golub Capital BDC (NASDAQ: GBDC) shares currently have a dividend yield of 7.40%.

Golub Capital BDC, Inc. is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. The company has a P/E ratio of 13.40.

The average volume for Golub Capital BDC has been 333,000 shares per day over the past 30 days. Golub Capital BDC has a market cap of $746.1 million and is part of the financial services industry. Shares are down 10.4% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Golub Capital BDC as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, compelling growth in net income, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 37.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for GOLUB CAPITAL BDC INC is rather high; currently it is at 67.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 58.00% significantly outperformed against the industry average.
  • 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 59.2% when compared to the same quarter one year prior, rising from $9.32 million to $14.84 million.
  • GOLUB CAPITAL BDC INC's earnings per share improvement from the most recent quarter was slightly positive. 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, GOLUB CAPITAL BDC INC increased its bottom line by earning $1.36 versus $1.31 in the prior year. For the next year, the market is expecting a contraction of 7.0% in earnings ($1.27 versus $1.36).
  • In its most recent trading session, GBDC 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.

QR Energy

Dividend Yield: 10.70%

QR Energy (NYSE: QRE) shares currently have a dividend yield of 10.70%.

QR Energy, LP, through its subsidiary, QRE Operating, LLC, is engaged in the acquisition, exploitation, development, and production of oil and natural gas properties in the United States. The company has a P/E ratio of 71.15.

The average volume for QR Energy has been 319,100 shares per day over the past 30 days. QR Energy has a market cap of $1.1 billion and is part of the energy industry. Shares are up 6.9% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates QR Energy as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, impressive record of earnings per share growth and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 22.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QR ENERGY LP reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, QR ENERGY LP turned its bottom line around by earning $0.13 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $0.13).
  • 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 1306.5% when compared to the same quarter one year prior, rising from $1.94 million to $27.24 million.
  • The gross profit margin for QR ENERGY LP is rather high; currently it is at 59.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.83% significantly outperformed against the industry average.
  • In its most recent trading session, QRE 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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

Memorial Production Partners

Dividend Yield: 9.50%

Memorial Production Partners (NASDAQ: MEMP) shares currently have a dividend yield of 9.50%.

Memorial Production Partners LP, through its subsidiary, is engaged in the acquisition, development, exploitation, and production of oil and natural gas properties. The company has a P/E ratio of 120.10.

The average volume for Memorial Production Partners has been 338,900 shares per day over the past 30 days. Memorial Production Partners has a market cap of $1.3 billion and is part of the energy industry. Shares are up 4.7% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Memorial Production Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • MEMP's very impressive revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues leaped by 517.8%. 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 MEMORIAL PRODUCTION PRTRS LP is rather high; currently it is at 65.92%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.79% is above that of the industry average.
  • Net operating cash flow has significantly increased by 69.11% to $82.37 million when compared to the same quarter last year. In addition, MEMORIAL PRODUCTION PRTRS LP has also vastly surpassed the industry average cash flow growth rate of -22.86%.
  • 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 111.2% when compared to the same quarter one year prior, rising from $5.14 million to $10.86 million.
  • MEMORIAL PRODUCTION PRTRS LP's earnings per share declined by 5.3% 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, MEMORIAL PRODUCTION PRTRS LP turned its bottom line around by earning $0.11 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $0.11).

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

Other helpful dividend tools from TheStreet:

null

More from Markets

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Video: You Could Live in a Ritz-Carlton or St. Regis Home

Video: You Could Live in a Ritz-Carlton or St. Regis Home

Component Stocks Rise After Trump Reverses Decision on ZTE

Component Stocks Rise After Trump Reverses Decision on ZTE