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: 9.20%

 

Solar Senior Capital (NASDAQ: SUNS) shares currently have a dividend yield of 9.20%.

 

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 12.61.

 

The average volume for Solar Senior Capital has been 58,000 shares per day over the past 30 days. Solar Senior Capital has a market cap of $177.5 million and is part of the financial services industry. Shares are down 14.8% year-to-date as of the close of trading on Wednesday.

 

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

 

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, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. 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 came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 30.6% when compared to the same quarter one year prior, rising from $1.49 million to $1.94 million.
  • Net operating cash flow has significantly increased by 135.72% to $4.69 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 -89.21%.
  • The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 75.09%. Regardless of SUNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SUNS's net profit margin of 37.78% significantly outperformed against the industry.
  • SOLAR SENIOR CAPITAL LTD has improved earnings per share by 30.8% 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 ($1.17 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.

 

Whitestone REIT

 

Dividend Yield: 8.20%

 

Whitestone REIT (NYSE: WSR) shares currently have a dividend yield of 8.20%.

 

WhiteStone REIT is a Maryland REIT engaged in owning and operating commercial properties in culturally diverse markets in major metropolitan areas. The company has a P/E ratio of 60.00.

 

The average volume for Whitestone REIT has been 97,700 shares per day over the past 30 days. Whitestone REIT has a market cap of $316.6 million and is part of the real estate industry. Shares are up 4.3% year-to-date as of the close of trading on Wednesday.

 

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

 

TheStreet Ratings rates Whitestone REIT as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

 

Highlights from the ratings report include:
  • WSR's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 19.0%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 29.2% when compared to the same quarter one year prior, rising from $0.97 million to $1.25 million.
  • Net operating cash flow has increased to $6.25 million or 43.77% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.03%.
  • WHITESTONE REIT's earnings per share declined by 16.7% 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, WHITESTONE REIT increased its bottom line by earning $0.21 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.21).

 

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: 10.30%

 

Pennant Park Investment Corporation (NASDAQ: PNNT) shares currently have a dividend yield of 10.30%.

 

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 7.79.

 

The average volume for Pennant Park Investment Corporation has been 667,800 shares per day over the past 30 days. Pennant Park Investment Corporation has a market cap of $726.5 million and is part of the financial services industry. Shares are down 6% year-to-date as of the close of trading on Wednesday.

 

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

 

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, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

 

Highlights from the ratings report include:
  • PNNT's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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 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 131.8% when compared to the same quarter one year prior, rising from $13.79 million to $31.95 million.
  • Net operating cash flow has increased to $84.79 million or 14.21% when compared to the same quarter last year. In addition, PENNANTPARK INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -89.21%.
  • The gross profit margin for PENNANTPARK INVESTMENT CORP is rather high; currently it is at 62.24%. Regardless of PNNT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PNNT's net profit margin of 90.06% significantly outperformed against the industry.

 

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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