What To Buy: Top 3 Buy-Rated Dividend Stocks: TCAP, ARI, FDUS

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: 8.70%

Triangle Capital Corporation (NYSE: TCAP) shares currently have a dividend yield of 8.70%.

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. The company has a P/E ratio of 12.31.

The average volume for Triangle Capital Corporation has been 235,400 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $690.3 million and is part of the financial services industry. Shares are down 8.6% 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 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. 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 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 of 75.61%, TRIANGLE CAPITAL CORP is still growing at a significantly lower rate than the industry average of 162.25%.
  • 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 26.9% in earnings ($2.15 versus $2.94).

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

Apollo Commercial Real Estate Finance

Dividend Yield: 9.70%

Apollo Commercial Real Estate Finance (NYSE: ARI) shares currently have a dividend yield of 9.70%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 12.20.

The average volume for Apollo Commercial Real Estate Finance has been 400,100 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $611.7 million and is part of the real estate industry. Shares are up 1.1% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Apollo Commercial Real Estate Finance as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, attractive valuation levels, expanding profit margins 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:
  • ARI's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 16.7%. 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 APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 81.06%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 83.08% significantly outperformed against the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 47.3% when compared to the same quarter one year prior, rising from $11.93 million to $17.58 million.
  • APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 27.3% 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, APOLLO COMMERCIAL RE FIN INC reported lower earnings of $1.26 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.26).

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

Fidus Investment

Dividend Yield: 8.70%

Fidus Investment (NASDAQ: FDUS) shares currently have a dividend yield of 8.70%.

Fidus Investment Corporation operates as an externally managed, closed-end, and non-diversified management investment company. The company provides customized debt and equity financing solutions to lower middle-market companies in the United States. The company has a P/E ratio of 9.17.

The average volume for Fidus Investment has been 93,700 shares per day over the past 30 days. Fidus Investment has a market cap of $239.8 million and is part of the financial services industry. Shares are down 19.8% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Fidus Investment as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. 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 came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 16.6%. 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 FIDUS INVESTMENT CORP is currently very high, coming in at 70.43%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.00% significantly outperformed against the industry average.
  • 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, FIDUS INVESTMENT CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • FIDUS INVESTMENT CORP's earnings per share declined by 20.9% 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, FIDUS INVESTMENT CORP increased its bottom line by earning $2.01 versus $1.91 in the prior year. For the next year, the market is expecting a contraction of 12.2% in earnings ($1.77 versus $2.01).
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FDUS has underperformed the S&P 500 Index, declining 5.89% 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.

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