3 Buy-Rated Dividend Stocks: SLRC, TCPC, TLP

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."

Solar Capital

Dividend Yield: 8.70%

Solar Capital (NASDAQ: SLRC) shares currently have a dividend yield of 8.70%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 23.39.

The average volume for Solar Capital has been 116,200 shares per day over the past 30 days. Solar Capital has a market cap of $780.8 million and is part of the financial services industry. Shares are up 13% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Solar Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. 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 greatly exceeded the industry average of 24.5%. Since the same quarter one year prior, revenues rose by 32.8%. 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 158.5% when compared to the same quarter one year prior, rising from $10.90 million to $28.18 million.
  • Net operating cash flow has significantly increased by 95.70% to -$1.02 million when compared to the same quarter last year. In addition, SOLAR CAPITAL LTD has also vastly surpassed the industry average cash flow growth rate of -198.08%.
  • The gross profit margin for SOLAR CAPITAL LTD is rather high; currently it is at 64.46%. Regardless of SLRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLRC's net profit margin of 82.79% significantly outperformed against the industry.
  • SOLAR CAPITAL LTD 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, SOLAR CAPITAL LTD reported lower earnings of $0.34 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus $0.34).

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TCP Capital

Dividend Yield: 9.80%

TCP Capital (NASDAQ: TCPC) shares currently have a dividend yield of 9.80%.

TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It seeks to invest in the United States. The company has a P/E ratio of 12.17.

The average volume for TCP Capital has been 125,700 shares per day over the past 30 days. TCP Capital has a market cap of $716.8 million and is part of the financial services industry. Shares are up 5.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates TCP Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations 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 24.5%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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 TCP CAPITAL CORP is currently very high, coming in at 81.51%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.16% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to -$34.60 million or 7.76% when compared to the same quarter last year. In addition, TCP CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -198.08%.
  • TCP CAPITAL CORP's earnings per share declined by 36.8% 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, TCP CAPITAL CORP increased its bottom line by earning $1.21 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $1.21).
  • 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, TCP CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.

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TransMontaigne Partners

Dividend Yield: 7.10%

TransMontaigne Partners (NYSE: TLP) shares currently have a dividend yield of 7.10%.

TransMontaigne Partners L.P. provides integrated terminaling, storage, transportation, and related services. The company has a P/E ratio of 19.08.

The average volume for TransMontaigne Partners has been 63,800 shares per day over the past 30 days. TransMontaigne Partners has a market cap of $621.7 million and is part of the energy industry. Shares are up 41.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates TransMontaigne Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations and notable return on equity. 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 24.5%. Since the same quarter one year prior, revenues slightly increased by 7.2%. 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 gross profit margin for TRANSMONTAIGNE PARTNERS LP is rather high; currently it is at 56.82%. Regardless of TLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TLP's net profit margin of 21.43% significantly outperformed against the industry.
  • Net operating cash flow has remained constant at $20.24 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -48.72%.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, TRANSMONTAIGNE PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 13.9% when compared to the same quarter one year ago, dropping from $10.12 million to $8.71 million.

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