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." Manhattan Bridge Capital Dividend Yield: 7.50% Manhattan Bridge Capital (NASDAQ: LOAN) shares currently have a dividend yield of 7.50%. Manhattan Bridge Capital, Inc., a real estate finance company, originates, services, and manages a portfolio of first mortgage loans in the United States. The company has a P/E ratio of 13.28. The average volume for Manhattan Bridge Capital has been 53,400 shares per day over the past 30 days. Manhattan Bridge Capital has a market cap of $25.9 million and is part of the financial services industry. Shares are up 4.7% year-to-date as of the close of trading on Thursday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates Manhattan Bridge Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. 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:
- LOAN's very impressive revenue growth greatly exceeded the industry average of 7.0%. Since the same quarter one year prior, revenues leaped by 53.1%. 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 200.00% and other important driving factors, this stock has surged by 79.23% 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 $0.29 versus $0.15 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 584.5% when compared to the same quarter one year prior, rising from $0.06 million to $0.40 million.
- You can view the full Manhattan Bridge Capital Ratings Report.
- 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 168.8% when compared to the same quarter one year prior, rising from -$4.51 million to $3.11 million.
- The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 62.83%. Regardless of HRZN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HRZN's net profit margin of 42.63% significantly outperformed against the industry.
- HORIZON TECHNOLOGY FINANCE 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HORIZON TECHNOLOGY FINANCE increased its bottom line by earning $1.60 versus $0.37 in the prior year. For the next year, the market is expecting a contraction of 18.4% in earnings ($1.31 versus $1.60).
- HRZN, with its decline in revenue, underperformed when compared the industry average of 5.8%. Since the same quarter one year prior, revenues fell by 17.0%. The declining revenue has not hurt the company's bottom line, with increasing 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. When compared to other companies in the Capital Markets industry and the overall market, HORIZON TECHNOLOGY FINANCE's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Horizon Technology Finance Ratings Report.
- The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 20.0%. 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 gross profit margin for NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 67.57%. It has increased significantly from the same period last year. Along with this, the net profit margin of 62.71% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 166.27% to $24.27 million when compared to the same quarter last year. Despite an increase in cash flow, NEW MOUNTAIN FINANCE CORP's cash flow growth rate is still lower than the industry average growth rate of 190.26%.
- NEW MOUNTAIN FINANCE CORP's earnings per share declined by 26.0% in the most recent quarter compared to the same quarter a year ago. 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, NEW MOUNTAIN FINANCE CORP reported lower earnings of $0.87 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($1.37 versus $0.87).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full New Mountain Finance Ratings Report.
- Our dividend calendar.