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."NVE Dividend Yield: 12.50% NVE (NASDAQ: NVEC) shares currently have a dividend yield of 12.50%. NVE Corporation is engaged in the development and sale of devices that use spintronics, a nanotechnology, which relies on electron spin rather than electron charge to acquire, store, and transmit information. The company has a P/E ratio of 24.09. The average volume for NVE has been 11,600 shares per day over the past 30 days. NVE has a market cap of $319.5 million and is part of the electronics industry. Shares are down 7.1% 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 NVE as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations, solid stock price performance and increase in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- NVEC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 21.67, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NVE CORP is currently very high, coming in at 80.29%. Regardless of NVEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVEC's net profit margin of 44.39% significantly outperformed against the industry.
- Net operating cash flow has remained constant at $3.85 million with no significant change when compared to the same quarter last year. Even though NVE CORP's cash flow growth was minimal, the firm managed to surpass its industry's average growth rate of -78.32%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- NVE CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NVE CORP reported lower earnings of $2.29 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.29).
- You can view the full NVE Ratings Report.
- The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 30.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 60.00% and other important driving factors, this stock has surged by 95.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LOAN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MANHATTAN BRIDGE CAPITAL INC 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. During the past fiscal year, MANHATTAN BRIDGE CAPITAL INC increased its bottom line by earning $0.15 versus $0.10 in the prior year.
- 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 121.1% when compared to the same quarter one year prior, rising from $0.19 million to $0.43 million.
- You can view the full Manhattan Bridge Capital Ratings Report.
- The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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 GOLUB CAPITAL BDC INC is currently very high, coming in at 73.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.08% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 70.59% to -$40.85 million when compared to the same quarter last year. In addition, GOLUB CAPITAL BDC INC has also vastly surpassed the industry average cash flow growth rate of -94.65%.
- 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, GOLUB CAPITAL BDC INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income increased by 2.3% when compared to the same quarter one year prior, going from $14.84 million to $15.17 million.
- You can view the full Golub Capital BDC Ratings Report.
- Our dividend calendar.