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: 11.30%

Fidus Investment (NASDAQ: FDUS) shares currently have a dividend yield of 11.30%.

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 6.23.

The average volume for Fidus Investment has been 46,900 shares per day over the past 30 days. Fidus Investment has a market cap of $225.1 million and is part of the financial services industry. Shares are down 6.9% year-to-date as of the close of trading on Thursday.

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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 shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.3%. 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.
  • 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, FIDUS INVESTMENT CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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).

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Newtek Business Services

Dividend Yield: 11.70%

Newtek Business Services (NASDAQ: NEWT) shares currently have a dividend yield of 11.70%.

Newtek Business Services Corp., a business development company, provides financial and business services to the small-and medium-sized business market in the United States and internationally.

The average volume for Newtek Business Services has been 123,400 shares per day over the past 30 days. Newtek Business Services has a market cap of $215.5 million and is part of the diversified services industry. Shares are up 15.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Newtek Business Services as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • 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 79.6% when compared to the same quarter one year prior, rising from $2.64 million to $4.75 million.
  • NEWTEK BUSINESS SERVICES CP has improved earnings per share by 31.4% 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, NEWTEK BUSINESS SERVICES CP reported lower earnings of $0.59 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $0.59).
  • 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, NEWTEK BUSINESS SERVICES CP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • NEWT, with its very weak revenue results, has greatly underperformed against the industry average of 6.3%. Since the same quarter one year prior, revenues plummeted by 81.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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TC Pipelines

Dividend Yield: 7.10%

TC Pipelines (NYSE: TCP) shares currently have a dividend yield of 7.10%.

TC PipeLines, LP acquires, owns, and participates in the management of energy infrastructure businesses in North America. The company has a P/E ratio of 17.00.

The average volume for TC Pipelines has been 173,300 shares per day over the past 30 days. TC Pipelines has a market cap of $3.2 billion and is part of the energy industry. Shares are down 31.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates TC Pipelines as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, growth in earnings per share and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 36.9%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TC PIPELINES LP has improved earnings per share by 45.8% 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 year. We feel that this trend should continue. During the past fiscal year, TC PIPELINES LP increased its bottom line by earning $2.67 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $2.67).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 58.1% when compared to the same quarter one year prior, rising from $31.00 million to $49.00 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, TC PIPELINES LP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 79.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 59.03% significantly outperformed against the industry average.

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