5 High-Yielding Financial Stocks Currently In An Uptrend

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 |  Includes: ARCC, GAIN, NMFC, PNNT, TICC
by: Arie Goren

I have searched for profitable stocks that pay very rich dividends with a low payout ratio. Those stocks would also have to show a low debt. I used the Portfolio123's powerful screener to perform the search. The screen's formula requires all stocks to comply with all following demands:

  1. The stock does not trade over-the-counter (OTC).
  2. Price is greater than 1.00.
  3. Market cap is greater than $100 million.
  4. Dividend yield is greater than 8.5%.
  5. The payout ratio is less than 100%.
  6. Total debt to equity is less than 1.00.

After running this screen on December 16, 2013, before the market open, only five stocks came out, all of them from the financial sector, as shown in the table below. In my opinion, these stocks can reward an investor a capital gain along with a gratifying income. I recommend readers to use this list of stocks as a basis for further research. All the data for this article were taken from Yahoo Finance, Portfolio123 and finviz.com.

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TICC Capital Corp. (NASDAQ:TICC)

TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company.

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Source: TICC Investor Presentation from JMP Securities Financial Services and Real Estate Conference

TICC Capital has a very low trailing P/E of 7.26 and a very low forward P/E of 9.05. The price to book value is quite low at 1.05, and the average annual earnings growth estimates for the next five years is at 3.3%. The forward annual dividend yield is very high at 11.33%, and the payout ratio is at 75.3%.

The TICC stock price is 0.20% above its 50-day simple moving average and 6.35% above its 200-day simple moving average. That indicates a mid-term and a long-term uptrend.

TICC Capital has recorded strong revenue and EPS growth, during the last three years and the last five years, as shown in the charts below.

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Source: TICC Investor Presentation from JMP Securities Financial Services and Real Estate Conference

Most of TICC Capital's margins and stock valuation parameters have been better than its industry median, sector median and the S&P 500 median, as shown in the tables below.

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Source: Portfolio123

On November 07, TICC Capital reported its latest quarter financial results. EPS came in at $0.28 in-line with analyst expectations. For the quarter ended September 30, 2013, the company recorded net investment income of approximately $12.2 million, or approximately $0.23 per share. Excluding the impact of a capital gains incentive fee accrual of approximately $2.3 million, our core net investment income was approximately $14.5 million, or approximately $0.28 per share. In the third quarter, TICC Capital also recorded net unrealized appreciation of approximately $12.7 million and net realized capital losses of approximately $1.3 million. In total, the company had a net increase in net assets resulting from operations of approximately $23.6 million or approximately $0.45 per share for the third quarter.

TICC Capital has recorded strong revenue and EPS growth, and considering its compelling valuation metrics, and the fact that the stock is in an uptrend, TICC stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

TICC Dividend Yield Chart

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Chart: finviz.com

PennantPark Investment Corp (NASDAQ:PNNT)

PennantPark Investment Corporation is a publicly listed business development firm specializing in direct and mezzanine investments in middle market companies.

PennantPark Investment has a relatively low debt (total debt to equity is only 0.52), and it has a very low trailing P/E of 8.51 and a very low forward P/E of 10.30. The price to book value is quite low at 1.12, and the average annual earnings growth estimates for the next five years is at 5%. The forward annual dividend yield is very high at 9.54%, and the payout ratio is at 80.6%.

The PNNT stock price is 0.11% above its 20-day simple moving average, 2.71% above its 50-day simple moving average and 6.08% above its 200-day simple moving average. That indicates a short-term, a mid-term and a long-term uptrend.

PennantPark Investment has recorded revenue, EPS and dividend growth, during the last year, as shown in the charts below.

Most of PennantPark Investment's margins and stock valuation parameters have been better than its industry median, sector median and the S&P 500 median, as shown in the tables below.

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On November 13, PennantPark Investment reported its third-quarter results. EPS came in at $0.26 in-line with analyst expectations. In the report, the company explained its distributions policy:

During the three months ended September 30, 2013 and 2012, we declared distributions of $0.28 per share for total distributions of $18.6 million and $15.8 million, respectively. During the fiscal years ended September 30, 2013 and 2012, we declared distributions of $1.12 per share, for total distributions of $74.4 million and $60.1 million, respectively. Distributions are paid from taxable earnings and may include a return of capital and/or capital gains. The specific tax characteristics of the distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in our periodic reports filed with the Securities and Exchange Commission.

PennantPark Investment has compelling valuation metrics and solid earnings growth prospects, and considering the fact that the stock is in an uptrend and is trading near book value, PNNT stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

PNNT Dividend Yield Chart

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Chart: finviz.com

Gladstone Investment Corporation (NASDAQ:GAIN)

Gladstone Investment Corporation is a business development company specializing in buyouts recapitalizations, and changes in control investments.

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Source: company presentation

Gladstone Investment has a low debt (total debt to equity is 0.52), and it has a very low trailing P/E of 13.66 and a very low forward P/E of 11.01. The price to book value is very low at 0.88, and the average annual earnings growth estimates for the next five years is at 7%. The forward annual dividend yield is very high at 9.41%, and the payout ratio is at 54.6%

The GAIN stock price is 3.11% above its 20-day simple moving average, 6.93% above its 50-day simple moving average and 9.91% above its 200-day simple moving average. That indicates a short-term, a mid-term and a long-term uptrend.

Gladstone Investment has recorded strong revenue and EPS growth, during the last year, the last three years and the last five years, as shown in the charts below.

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Source: company presentation

Most of Gladstone's Investment's growth rates, margins and stock valuation parameters have been better than its industry median, sector median and the S&P 500 median, as shown in the tables below.

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On November 06, Gladstone Investment reported its second-quarter financial results, which beat EPS expectations by $0.06. Net Investment Income for the quarters ended September 30 and June 30, 2013 was $6.2 million, or $0.24 per share, and $4.0 million, or $0.15 per share, respectively, an increase of 54.4%.

Gladstone Investment has recorded strong revenue and EPS growth, and considering its compelling valuation metrics, its good earnings growth prospects, and the fact that the stock is in an uptrend, GAIN stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

GAIN Dividend Yield Chart

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Chart: finviz.com

New Mountain Finance Corporation (NYSE:NMFC)

New Mountain Finance Corporation operates as a closed-end, non-diversified management investment company.

New Mountain Finance has no debt at all, and it has a very low trailing P/E of 9.95 and a very low forward P/E of 10.60. The price to book value is low at 1.02, and the average annual earnings growth estimates for the next five years is at 8.0%. The forward annual dividend yield is very high at 9.30%, and the payout ratio is at 93%.

The NMFC stock price is 0.74% above its 50-day simple moving average and 2.84% above its 200-day simple moving average. That indicates a mid-term and a long-term uptrend.

On November 12, New Mountain Finance reported its third-quarter financial results. EPS came in at $0.35 a $0.01 better than analyst expectations. In the report, Robert Hamwee, CEO, commented:

The third quarter represented another strong quarter for NMFC, in which we once again more than covered our dividend and maintained a stable portfolio yield while most importantly, experienced no material negative portfolio credit migration.

New Mountain Finance has compelling valuation metrics and good earnings growth prospects, and considering the fact that the stock is in an uptrend and is trading way near book value, NMFC stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

NMFC Dividend Yield (<a href=

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Chart: finviz.com

Ares Capital Corporation (NASDAQ:ARCC)

Ares Capital Corporation is a private equity firm specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.

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Source: Third Quarter 2013 Earnings Presentation

Ares Capital has no long-term debt at all, and it has a very low trailing P/E of 8.39 and a very low forward P/E of 10.46. The PEG ratio is quite low at 1.05, and the average annual earnings growth estimates for the next 5 years is quite high at 8%. The forward annual dividend yield is very high at 8.75%, and the payout ratio is at 73.8%.

The ARCC stock price is 0.77% above its 50-day simple moving average and 3.59% above its 200-day simple moving average. That indicates a mid-term and a long-term uptrend.

Analysts like the stock. Among the 17 analysts covering the stock, six rate it as a strong buy, six rate it as a buy, and five rate it as a hold.

Ares Capital has recorded revenue and EPS growth during the last three years and the last five years, as shown in the table below.

Most of Ares Capital's margins, return on capital and stock valuation parameters have been better than its industry median, sector median and the S&P 500 median, as shown in the tables below.

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On November 05, Ares Capital reported its third-quarter financial results, which beat EPS expectations by $0.09. For the quarter ended September 30, 2013, Ares Capital reported GAAP net income of $140.8 million or $0.52 per share, Core EPS of $0.48 per share, net investment income of $126.2 million, or $0.47 per share, and net realized and unrealized gains of $14.6 million or $0.05 per share. As of September 30, 2013, total assets were $7.8 billion, stockholders' equity was $4.4 billion and net asset value per share was $16.35.

Ares Capital has recorded revenue and EPS growth, and considering its compelling valuation metrics, its good earnings growth prospects, and the fact that the stock is in an uptrend, ARCC stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

ARCC Dividend Yield (NYSE:<a href='http://seekingalpha.com/symbol/TTM' title='Tata Motors Limited'>TTM</a>) Chart
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Chart: finviz.com

Disclosure: I am long ARCC, GAIN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.