What To Buy: Top 3 Buy-Rated Dividend Stocks: MPW, OKS, FTR

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."

Medical Properties

Dividend Yield: 6.30%

Medical Properties (NYSE: MPW) shares currently have a dividend yield of 6.30%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 22.22.

The average volume for Medical Properties has been 1,381,000 shares per day over the past 30 days. Medical Properties has a market cap of $2.2 billion and is part of the real estate industry. Shares are up 8.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Medical Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. 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 6.7%. Since the same quarter one year prior, revenues rose by 19.6%. 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 $39.24 million or 28.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.11%.
  • The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 50.44%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MPW's net profit margin of 26.36% compares favorably to the industry average.
  • MEDICAL PROPERTIES TRUST's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MEDICAL PROPERTIES TRUST increased its bottom line by earning $0.59 versus $0.54 in the prior year.
  • The share price of MEDICAL PROPERTIES TRUST has not done very well: it is down 14.26% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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

ONEOK Partners

Dividend Yield: 5.20%

ONEOK Partners (NYSE: OKS) shares currently have a dividend yield of 5.20%.

ONEOK Partners, L.P. is engaged in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in three segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. The company has a P/E ratio of 23.13.

The average volume for ONEOK Partners has been 411,300 shares per day over the past 30 days. ONEOK Partners has a market cap of $9.1 billion and is part of the energy industry. Shares are up 8.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates ONEOK Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, increase in net income and growth in earnings per share. We feel these 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 came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth 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 increased by 8.5% when compared to the same quarter one year prior, going from $210.41 million to $228.35 million.
  • Net operating cash flow has slightly increased to $353.61 million or 8.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.97%.
  • ONEOK PARTNERS -LP's earnings per share improvement from the most recent quarter was slightly positive. 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, ONEOK PARTNERS -LP reported lower earnings of $2.35 versus $3.04 in the prior year. This year, the market expects an improvement in earnings ($2.76 versus $2.35).
  • In its most recent trading session, OKS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

Frontier Communications

Dividend Yield: 6.80%

Frontier Communications (NASDAQ: FTR) shares currently have a dividend yield of 6.80%.

Frontier Communications Corporation, a communications company, provides regulated and unregulated voice, data, and video services to residential, business, and wholesale customers in the United States. The company has a P/E ratio of 47.07.

The average volume for Frontier Communications has been 11,615,400 shares per day over the past 30 days. Frontier Communications has a market cap of $5.9 billion and is part of the telecommunications industry. Shares are up 26.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Frontier Communications as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has slightly increased to $420.29 million or 7.16% when compared to the same quarter last year. In addition, FRONTIER COMMUNICATIONS CORP has also modestly surpassed the industry average cash flow growth rate of 4.30%.
  • 46.88% is the gross profit margin for FRONTIER COMMUNICATIONS CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FTR's net profit margin of 5.74% significantly trails the industry average.
  • Powered by its strong earnings growth of 250.00% and other important driving factors, this stock has surged by 42.92% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • FRONTIER COMMUNICATIONS CORP 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, FRONTIER COMMUNICATIONS CORP reported lower earnings of $0.12 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.12).
  • FTR, with its decline in revenue, slightly underperformed the industry average of 1.0%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. The declining revenue has not hurt the company's bottom line, with increasing 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.

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