Buy These Top 3 Buy-Rated Dividend Stocks Today: KCAP, TICC, GAIN

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."

KCAP Financial

Dividend Yield: 11.80%

KCAP Financial (NASDAQ: KCAP) shares currently have a dividend yield of 11.80%.

KCAP Financial, Inc. is a private equity and venture capital firm specializing in mid market, buyouts, and mezzanine investments. It focuses on mature and middle market companies. The company has a P/E ratio of 16.88.

The average volume for KCAP Financial has been 229,100 shares per day over the past 30 days. KCAP Financial has a market cap of $284.6 million and is part of the financial services industry. Shares are up 5.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates KCAP Financial 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 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 revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 17.6%. 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 KCAP FINANCIAL INC is currently very high, coming in at 82.71%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 92.70% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 141.63% to $6.02 million when compared to the same quarter last year. In addition, KCAP FINANCIAL INC has also vastly surpassed the industry average cash flow growth rate of -89.21%.
  • 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 43.6% when compared to the same quarter one year prior, rising from $8.53 million to $12.25 million.
  • KCAP FINANCIAL INC has improved earnings per share by 36.0% 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, KCAP FINANCIAL INC reported lower earnings of $0.53 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.53).

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TICC Capital

Dividend Yield: 12.80%

TICC Capital (NASDAQ: TICC) shares currently have a dividend yield of 12.80%.

TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. The company has a P/E ratio of 8.26.

The average volume for TICC Capital has been 420,100 shares per day over the past 30 days. TICC Capital has a market cap of $547.8 million and is part of the financial services industry. Shares are down 13.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates TICC Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 17.7%. 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 801.6% when compared to the same quarter one year prior, rising from $1.46 million to $13.14 million.
  • The gross profit margin for TICC CAPITAL CORP is currently very high, coming in at 74.66%. Regardless of TICC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TICC's net profit margin of 43.88% significantly outperformed against the industry.
  • TICC CAPITAL CORP 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, TICC CAPITAL CORP reported lower earnings of $1.11 versus $1.77 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $1.11).
  • TICC has underperformed the S&P 500 Index, declining 7.95% 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.

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Gladstone Investment Corporation

Dividend Yield: 9.90%

Gladstone Investment Corporation (NASDAQ: GAIN) shares currently have a dividend yield of 9.90%.

Gladstone Investment Corporation is a business development company specializing in buyout, recapitalization, and changes in control investments. The company has a P/E ratio of 11.92.

The average volume for Gladstone Investment Corporation has been 133,100 shares per day over the past 30 days. Gladstone Investment Corporation has a market cap of $192.5 million and is part of the financial services industry. Shares are down 9.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Gladstone Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 33.0%. 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 265.2% when compared to the same quarter one year prior, rising from -$6.52 million to $10.77 million.
  • Net operating cash flow has significantly increased by 108.67% to $2.64 million when compared to the same quarter last year. In addition, GLADSTONE INVESTMENT CORP/DE has also vastly surpassed the industry average cash flow growth rate of -89.21%.
  • The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 66.73%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 109.48% significantly outperformed against the industry.
  • GLADSTONE INVESTMENT CORP/DE 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, GLADSTONE INVESTMENT CORP/DE swung to a loss, reporting -$0.06 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus -$0.06).

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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