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: 8.50% Triangle Capital Corporation (NYSE: TCAP) shares currently have a dividend yield of 8.50%. Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. The company has a P/E ratio of 12.10. The average volume for Triangle Capital Corporation has been 251,500 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $706.6 million and is part of the financial services industry. Shares are down 8.3% year-to-date as of the close of trading on Friday. 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 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, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow. 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. Compared to other companies in the Capital Markets industry and the overall market, TRIANGLE CAPITAL CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for TRIANGLE CAPITAL CORP is currently very high, coming in at 79.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 97.01% significantly outperformed against the industry average.
- TRIANGLE CAPITAL CORP has improved earnings per share by 10.1% 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 28.4% in earnings ($2.11 versus $2.94).
- TCAP, with its decline in revenue, underperformed when compared the industry average of 5.1%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Capital Markets industry average, but is greater than that of the S&P 500. The net income increased by 10.7% when compared to the same quarter one year prior, going from $21.85 million to $24.20 million.
- You can view the full Triangle Capital Corporation Ratings Report.
- TLP's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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 TRANSMONTAIGNE PARTNERS LP is rather high; currently it is at 57.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.54% significantly outperformed against the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 31.8% when compared to the same quarter one year prior, rising from $8.22 million to $10.84 million.
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
- TRANSMONTAIGNE PARTNERS LP has improved earnings per share by 19.1% 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, TRANSMONTAIGNE PARTNERS LP reported lower earnings of $1.90 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($2.19 versus $1.90).
- You can view the full TransMontaigne Partners Ratings Report.
- COMPASS DIVERSIFIED HOLDINGS 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, COMPASS DIVERSIFIED HOLDINGS turned its bottom line around by earning $1.07 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $1.07).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 1105.1% when compared to the same quarter one year prior, rising from -$0.57 million to $5.72 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, COMPASS DIVERSIFIED HOLDINGS's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full Compass Diversified Holdings Ratings Report.
- Our dividend calendar.