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."

Manhattan Bridge Capital

Dividend Yield: 7.60%

Manhattan Bridge Capital (NASDAQ: LOAN) shares currently have a dividend yield of 7.60%.

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 14.10.

The average volume for Manhattan Bridge Capital has been 38,300 shares per day over the past 30 days. Manhattan Bridge Capital has a market cap of $30.6 million and is part of the financial services industry. Shares are up 4% year-to-date as of the close of trading on Wednesday.

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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, attractive valuation levels, expanding profit margins and good cash flow from operations. 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:
  • The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 44.8%. 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.
  • Compared to its closing price of one year ago, LOAN's share price has jumped by 53.87%, exceeding the performance of the broader market during that same time frame. 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.
  • The gross profit margin for MANHATTAN BRIDGE CAPITAL INC is currently very high, coming in at 76.43%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 58.11% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $0.48 million or 21.66% when compared to the same quarter last year. In addition, MANHATTAN BRIDGE CAPITAL INC has also modestly surpassed the industry average cash flow growth rate of 15.56%.

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BlackRock Capital Investment

Dividend Yield: 8.80%

BlackRock Capital Investment (NASDAQ: BKCC) shares currently have a dividend yield of 8.80%.

BlackRock Capital Investment Corporation, formerly known as BlackRock Kelso Capital Corporation, is a Business Development Company specializing in investments in middle market companies. The fund invests in all industries. The company has a P/E ratio of 6.64.

The average volume for BlackRock Capital Investment has been 332,800 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $709.4 million and is part of the financial services industry. Shares are up 14.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates BlackRock Capital Investment as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

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, BLACKROCK CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for BLACKROCK CAPITAL INVT CORP is currently very high, coming in at 74.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.97% significantly outperformed against the industry average.
  • After a year of stock price fluctuations, the net result is that BKCC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • BKCC, with its decline in revenue, slightly underperformed the industry average of 6.9%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BLACKROCK CAPITAL INVT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BLACKROCK CAPITAL INVT CORP increased its bottom line by earning $1.70 versus $1.20 in the prior year. For the next year, the market is expecting a contraction of 47.4% in earnings ($0.90 versus $1.70).

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Gladstone Investment

Dividend Yield: 10.00%

Gladstone Investment (NASDAQ: GAIN) shares currently have a dividend yield of 10.00%.

Gladstone Investment Corporation is a business development company specializing in buyouts; recapitalizations; refinancing existing debt; senior debt securities; junior subordinated debt securities; limited liability company interests, and warrants or options. The company has a P/E ratio of 53.36.

The average volume for Gladstone Investment has been 205,400 shares per day over the past 30 days. Gladstone Investment has a market cap of $226.1 million and is part of the financial services industry. Shares are up 5.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Gladstone Investment as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 29.2%. 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 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 Capital Markets industry and the overall market, GLADSTONE INVESTMENT CORP/DE's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 66.54%. 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 67.36% significantly outperformed against the industry.
  • After a year of stock price fluctuations, the net result is that GAIN's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • GLADSTONE INVESTMENT CORP/DE's earnings per share declined by 31.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GLADSTONE INVESTMENT CORP/DE turned its bottom line around by earning $1.88 versus -$0.06 in the prior year. For the next year, the market is expecting a contraction of 60.6% in earnings ($0.74 versus $1.88).

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