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."

Fidus Investment

Dividend Yield: 11.00%

Fidus Investment (NASDAQ: FDUS) shares currently have a dividend yield of 11.00%.

Fidus Investment Corporation operates as an externally managed, closed-end, and non-diversified management investment company. The company provides customized debt and equity financing solutions to lower middle-market companies in the United States. The company has a P/E ratio of 6.39.

The average volume for Fidus Investment has been 49,800 shares per day over the past 30 days. Fidus Investment has a market cap of $230.7 million and is part of the financial services industry. Shares are down 2.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Fidus Investment as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and notable return on equity. We feel its 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 6.9%. Since the same quarter one year prior, revenues rose by 21.0%. Growth in the company's revenue appears to have helped boost 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 82.2% when compared to the same quarter one year prior, rising from $3.43 million to $6.25 million.
  • The gross profit margin for FIDUS INVESTMENT CORP is rather high; currently it is at 65.22%. Regardless of FDUS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FDUS's net profit margin of 48.80% significantly outperformed against the industry.
  • FIDUS INVESTMENT CORP reported significant earnings per share improvement 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, FIDUS INVESTMENT CORP reported lower earnings of $1.34 versus $2.01 in the prior year. This year, the market expects an improvement in earnings ($1.58 versus $1.34).
  • 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. When compared to other companies in the Capital Markets industry and the overall market, FIDUS INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.

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Main Street Capital Corporation

Dividend Yield: 7.70%

Main Street Capital Corporation (NYSE: MAIN) shares currently have a dividend yield of 7.70%.

Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The company has a P/E ratio of 11.53.

The average volume for Main Street Capital Corporation has been 305,600 shares per day over the past 30 days. Main Street Capital Corporation has a market cap of $1.4 billion and is part of the financial services industry. Shares are down 2.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Main Street Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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 18.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 98.77% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 94.45% to -$6.63 million when compared to the same quarter last year. In addition, MAIN STREET CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -422.49%.
  • 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 36.2% when compared to the same quarter one year prior, rising from $29.95 million to $40.80 million.
  • MAIN STREET CAPITAL CORP has improved earnings per share by 20.6% 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, MAIN STREET CAPITAL CORP reported lower earnings of $2.33 versus $2.66 in the prior year. For the next year, the market is expecting a contraction of 6.4% in earnings ($2.18 versus $2.33).

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Gladstone Investment

Dividend Yield: 10.50%

Gladstone Investment (NASDAQ: GAIN) shares currently have a dividend yield of 10.50%.

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 51.07.

The average volume for Gladstone Investment has been 170,600 shares per day over the past 30 days. Gladstone Investment has a market cap of $216.4 million and is part of the financial services industry. Shares are up 2.1% year-to-date as of the close of trading on Tuesday.

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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. Although this company's share value is no higher or lower since its value 12 months ago, it seems as though there could be potential for future growth.
  • 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 60.9% in earnings ($0.74 versus $1.88).

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