Buy-Rated Dividend Stocks In The Top 3: SUNS, PNNT, FULL

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."

Solar Senior Capital

Dividend Yield: 8.40%

Solar Senior Capital (NASDAQ: SUNS) shares currently have a dividend yield of 8.40%.

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 14.03.

The average volume for Solar Senior Capital has been 54,500 shares per day over the past 30 days. Solar Senior Capital has a market cap of $192.5 million and is part of the financial services industry. Shares are down 8.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Solar Senior Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, good cash flow from operations 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 revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 28.6%. 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 SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 74.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 69.52% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 180.47% to $13.82 million when compared to the same quarter last year. In addition, SOLAR SENIOR CAPITAL LTD has also vastly surpassed the industry average cash flow growth rate of 12.42%.
  • 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 Capital Markets industry average. The net income increased by 37.3% when compared to the same quarter one year prior, rising from $2.90 million to $3.99 million.
  • SOLAR SENIOR CAPITAL LTD has improved earnings per share by 34.6% 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 ($1.34 versus $1.11).

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

Pennant Park Investment Corporation

Dividend Yield: 10.10%

Pennant Park Investment Corporation (NASDAQ: PNNT) shares currently have a dividend yield of 10.10%.

PennantPark Investment Corporation is a publicly listed business development firm specializing in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The company has a P/E ratio of 6.31.

The average volume for Pennant Park Investment Corporation has been 525,500 shares per day over the past 30 days. Pennant Park Investment Corporation has a market cap of $735.6 million and is part of the financial services industry. Shares are down 4.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Pennant Park Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 22.0%. 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, PENNANTPARK INVESTMENT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PENNANTPARK INVESTMENT CORP is rather high; currently it is at 66.36%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 107.39% 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 Capital Markets industry average. The net income increased by 50.8% when compared to the same quarter one year prior, rising from $26.97 million to $40.68 million.
  • PENNANTPARK INVESTMENT CORP has improved earnings per share by 48.8% 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, PENNANTPARK INVESTMENT CORP increased its bottom line by earning $1.39 versus $1.21 in the prior year. For the next year, the market is expecting a contraction of 18.0% in earnings ($1.14 versus $1.39).

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

Full Circle Capital

Dividend Yield: 10.30%

Full Circle Capital (NASDAQ: FULL) shares currently have a dividend yield of 10.30%.

Full Circle Capital Corporation is a business development company and operates as an externally managed non-diversified closed-end management investment company. The company has a P/E ratio of 31.32.

The average volume for Full Circle Capital has been 138,700 shares per day over the past 30 days. Full Circle Capital has a market cap of $79.0 million and is part of the financial services industry. Shares are up 11.9% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Full Circle Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • FULL's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 71.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FULL CIRCLE CAPITAL CORP 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 two years. We feel that this trend should continue. During the past fiscal year, FULL CIRCLE CAPITAL CORP increased its bottom line by earning $0.52 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.52).
  • 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 128.3% when compared to the same quarter one year prior, rising from $1.48 million to $3.38 million.
  • The gross profit margin for FULL CIRCLE CAPITAL CORP is currently very high, coming in at 77.69%. It has increased significantly from the same period last year. Along with this, the net profit margin of 65.43% significantly outperformed against the industry average.
  • Net operating cash flow has increased to -$3.54 million or 15.92% when compared to the same quarter last year. In addition, FULL CIRCLE CAPITAL CORP has also modestly surpassed the industry average cash flow growth rate of 12.42%.

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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