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 13.97. The average volume for Manhattan Bridge Capital has been 32,300 shares per day over the past 30 days. Manhattan Bridge Capital has a market cap of $30.3 million and is part of the financial services industry. Shares are up 6.7% 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, attractive valuation levels, expanding profit margins and good cash flow from operations. 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:
- 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 45.19%, 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%.
- You can view the full Manhattan Bridge Capital Ratings Report.
- GBDC's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 12.3% when compared to the same quarter one year prior, going from $16.28 million to $18.29 million.
- The gross profit margin for GOLUB CAPITAL BDC INC is currently very high, coming in at 70.20%. Regardless of GBDC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GBDC's net profit margin of 60.13% significantly outperformed against the industry.
- GOLUB CAPITAL BDC INC's earnings per share improvement from the most recent quarter was slightly positive. 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, GOLUB CAPITAL BDC INC increased its bottom line by earning $1.44 versus $1.36 in the prior year. For the next year, the market is expecting a contraction of 13.9% in earnings ($1.24 versus $1.44).
- After a year of stock price fluctuations, the net result is that GBDC'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.
- You can view the full Golub Capital BDC Ratings Report.
- CODI's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.8%. 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 significantly exceeds that of both the industry average and the S&P 500.
- 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 327.6% when compared to the same quarter one year prior, rising from $5.72 million to $24.46 million.
- Net operating cash flow has significantly increased by 66.93% to $28.98 million when compared to the same quarter last year. In addition, COMPASS DIVERSIFIED HOLDINGS has also vastly surpassed the industry average cash flow growth rate of 15.56%.
- You can view the full Compass Diversified Holdings Ratings Report.
- Our dividend calendar.