Best Of The Buy-Rated Dividend Stocks: Top 3 Companies: OKS, SNH, HPT

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."

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 21.89.

The average volume for ONEOK Partners has been 478,500 shares per day over the past 30 days. ONEOK Partners has a market cap of $10.3 billion and is part of the energy industry. Shares are up 11.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates ONEOK Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, increase in stock price during the past year and increase in net income. 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 2.4%. Since the same quarter one year prior, revenues rose by 10.7%. 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 6.0% when compared to the same quarter one year prior, going from $202.37 million to $214.43 million.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ONEOK PARTNERS -LP's earnings per share declined by 12.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over 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 ($2.74 versus $2.35).

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

Senior Housing Properties

Dividend Yield: 6.70%

Senior Housing Properties (NYSE: SNH) shares currently have a dividend yield of 6.70%.

Senior Housing Properties Trust, a real estate investment trust (REIT), primarily invests in senior housing properties in the United States. The trust invests in hospitals, nursing homes, senior apartments, independent living properties, and assisted living properties. The company has a P/E ratio of 23.28.

The average volume for Senior Housing Properties has been 1,733,900 shares per day over the past 30 days. Senior Housing Properties has a market cap of $4.7 billion and is part of the real estate industry. Shares are up 4.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Senior Housing Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, compelling growth in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • SNH's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 10.4%. 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 S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 572.7% when compared to the same quarter one year prior, rising from $5.60 million to $37.66 million.
  • Net operating cash flow has increased to $88.89 million or 15.08% when compared to the same quarter last year. In addition, SENIOR HOUSING PPTYS TRUST has also modestly surpassed the industry average cash flow growth rate of 15.06%.
  • SENIOR HOUSING PPTYS TRUST has improved earnings per share by 12.5% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SENIOR HOUSING PPTYS TRUST increased its bottom line by earning $0.98 versus $0.78 in the prior year. For the next year, the market is expecting a contraction of 14.3% in earnings ($0.84 versus $0.98).

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

Hospitality Properties

Dividend Yield: 6.70%

Hospitality Properties (NYSE: HPT) shares currently have a dividend yield of 6.70%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 34.83.

The average volume for Hospitality Properties has been 664,100 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.4 billion and is part of the real estate industry. Shares are up 8% year-to-date as of the close of trading on Thursday.

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

TheStreet Ratings rates Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • 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 18.9% when compared to the same quarter one year prior, going from $45.35 million to $53.92 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HOSPITALITY PROPERTIES TRUST has improved earnings per share by 22.2% 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, HOSPITALITY PROPERTIES TRUST reported lower earnings of $0.73 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.73).

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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