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 Senior Capital Dividend Yield: 8.40% Solar Senior Capital (NASDAQ: SUNS) shares currently have a dividend yield of 8.40%. Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. The company has a P/E ratio of 16.66. The average volume for Solar Senior Capital has been 26,500 shares per day over the past 30 days. Solar Senior Capital has a market cap of $194.1 million and is part of the financial services industry. Shares are up 12.7% year-to-date as of the close of trading on Wednesday. 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 Solar Senior Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, solid stock price performance 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 came in higher than the industry average of 24.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 77.43%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 132.52% significantly outperformed against the industry average.
- 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 105.9% when compared to the same quarter one year prior, rising from $4.09 million to $8.41 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- SOLAR SENIOR 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 SENIOR CAPITAL LTD reported lower earnings of $0.08 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $0.08).
- You can view the full Solar Senior Capital Ratings Report.
- The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 42.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MONROE CAPITAL CORP has improved earnings per share by 48.8% 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 two years. We feel that this trend should continue. During the past fiscal year, MONROE CAPITAL CORP increased its bottom line by earning $1.55 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.55).
- 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 105.0% when compared to the same quarter one year prior, rising from $3.88 million to $7.94 million.
- Net operating cash flow has significantly increased by 102.66% to $0.40 million when compared to the same quarter last year. In addition, MONROE CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -146.35%.
- The gross profit margin for MONROE CAPITAL CORP is rather high; currently it is at 64.81%. Regardless of MRCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRCC's net profit margin of 68.84% significantly outperformed against the industry.
- You can view the full Monroe Capital Ratings Report.
- Compared to its closing price of one year ago, CINR's share price has jumped by 26.74%, 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, CINR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CINR has a quick ratio of 2.38, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $36.80 million or 6.05% when compared to the same quarter last year. Despite an increase in cash flow of 6.05%, CINER RESOURCES LP is still growing at a significantly lower rate than the industry average of 75.87%.
- 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. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, CINER RESOURCES LP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- You can view the full Ciner Resources Ratings Report.
- Our dividend calendar.