3 Buy-Rated Dividend Stocks Taking The Lead: NPD, PZN, AB

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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 and 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."

China Nepstar Chain Drugstore

Dividend Yield: 11.20%

China Nepstar Chain Drugstore (NYSE: NPD) shares currently have a dividend yield of 11.20%.

China Nepstar Chain Drugstore Ltd., through its subsidiaries, owns and operates a retail drugstore chain that sells a range of pharmaceutical and other healthcare products in the People's Republic of China. The company has a P/E ratio of 38.29.

The average volume for China Nepstar Chain Drugstore has been 169,700 shares per day over the past 30 days. China Nepstar Chain Drugstore has a market cap of $264.6 million and is part of the retail industry. Shares are up 38.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates China Nepstar Chain Drugstore as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 10.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • NPD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
  • This stock has managed to rise its share value by 41.97% over the past twelve months. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • 42.40% is the gross profit margin for CHINA NEPSTAR CHAIN DRUG-ADS which we consider to be strong. Regardless of NPD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.67% trails the industry average.
  • CHINA NEPSTAR CHAIN DRUG-ADS has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CHINA NEPSTAR CHAIN DRUG-ADS increased its bottom line by earning $0.14 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 73.6% in earnings ($0.04 versus $0.14).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Pzena Investment Management

Dividend Yield: 9.70%

Pzena Investment Management (NYSE: PZN) shares currently have a dividend yield of 9.70%.

Pzena Investment Management, Inc. is a publicly owned investment manager. The company has a P/E ratio of 24.30.

The average volume for Pzena Investment Management has been 89,900 shares per day over the past 30 days. Pzena Investment Management has a market cap of $129.9 million and is part of the financial services industry. Shares are down 5.3% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Pzena Investment Management as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. 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 16.9%. Since the same quarter one year prior, revenues rose by 48.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 Capital Markets industry and the overall market, PZENA INVESTMENT MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • PZENA INVESTMENT MANAGEMENT reported significant earnings per share improvement 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, PZENA INVESTMENT MANAGEMENT increased its bottom line by earning $0.46 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.46).
  • 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 138.4% when compared to the same quarter one year prior, rising from $0.96 million to $2.28 million.
  • The gross profit margin for PZENA INVESTMENT MANAGEMENT is rather high; currently it is at 59.82%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, PZN's net profit margin of 7.92% significantly trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

AllianceBernstein Holding L.P

Dividend Yield: 10.00%

AllianceBernstein Holding L.P (NYSE: AB) shares currently have a dividend yield of 10.00%.

AllianceBernstein Holding L.P. provides investment management and related services in the United States and internationally. The company has a P/E ratio of 14.11.

The average volume for AllianceBernstein Holding L.P has been 404,500 shares per day over the past 30 days. AllianceBernstein Holding L.P has a market cap of $2.3 billion and is part of the financial services industry. Shares are up 13% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates AllianceBernstein Holding L.P as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • AB's very impressive revenue growth greatly exceeded the industry average of 16.9%. Since the same quarter one year prior, revenues leaped by 134.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCEBERNSTEIN HOLDING LP reported significant earnings per share improvement 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, ALLIANCEBERNSTEIN HOLDING LP increased its bottom line by earning $1.72 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $1.72).
  • 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 119.5% when compared to the same quarter one year prior, rising from $26.19 million to $57.47 million.
  • The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, AB's net profit margin of 91.26% significantly outperformed against the industry.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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