3 Buy-Rated Dividend Stocks: MO, AB, NHI

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 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."

Altria Group

Dividend Yield: 4.60%

Altria Group (NYSE: MO) shares currently have a dividend yield of 4.60%.

Altria Group, Inc., through its subsidiaries, manufactures and sells cigarettes, smokeless products, and wine in the United States and internationally. The company has a P/E ratio of 19.36.

The average volume for Altria Group has been 7,412,100 shares per day over the past 30 days. Altria Group has a market cap of $83.1 billion and is part of the tobacco industry. Shares are up 9.2% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Altria Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in stock price during the past year 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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.
  • Net operating cash flow has increased to $2,125.00 million or 18.51% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -31.35%.
  • ALTRIA GROUP INC's earnings per share declined by 14.5% 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, ALTRIA GROUP INC increased its bottom line by earning $2.26 versus $2.06 in the prior year. This year, the market expects an improvement in earnings ($2.57 versus $2.26).
  • The gross profit margin for ALTRIA GROUP INC is rather high; currently it is at 57.41%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MO's net profit margin of 29.31% compares favorably to the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.

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: 6.10%

AllianceBernstein Holding L.P (NYSE: AB) shares currently have a dividend yield of 6.10%.

AllianceBernstein Holding L.P. provides investment management and related services in the United States and internationally. The company has a P/E ratio of 14.92.

The average volume for AllianceBernstein Holding L.P has been 373,600 shares per day over the past 30 days. AllianceBernstein Holding L.P has a market cap of $2.5 billion and is part of the financial services industry. Shares are up 21.3% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates AllianceBernstein Holding L.P as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, increase in stock price during the past year 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:
  • Net operating cash flow has significantly increased by 50.43% to $63.46 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.98%.
  • ALLIANCEBERNSTEIN HOLDING LP reported flat earnings per share in the most recent quarter. 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, 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 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 87.40% significantly outperformed against the industry.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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

National Health Investors

Dividend Yield: 4.90%

National Health Investors (NYSE: NHI) shares currently have a dividend yield of 4.90%.

National Health Investors, Inc., a real estate investment trust (REIT), invests in health care properties, primarily in the long-term care industry in the United States. The company has a P/E ratio of 20.98.

The average volume for National Health Investors has been 163,800 shares per day over the past 30 days. National Health Investors has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 11.5% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates National Health Investors as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • NHI's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 59.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NATIONAL HEALTH INVESTORS has improved earnings per share by 42.0% 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, NATIONAL HEALTH INVESTORS increased its bottom line by earning $2.73 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.23 versus $2.73).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 49.5% when compared to the same quarter one year prior, rising from $15.74 million to $23.53 million.
  • The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 71.01%. It has increased significantly from the same period last year. Along with this, the net profit margin of 54.35% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $28.88 million or 21.09% when compared to the same quarter last year. Despite an increase in cash flow, NATIONAL HEALTH INVESTORS's average is still marginally south of the industry average growth rate of 30.73%.

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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