A High Yielding Selection About To Go Through A Growth Spurt

| About: ONEOK Partners, (OKS)

The market has become increasing volatile over the past few weeks. Given the crisis in Europe, that is not likely to change over the coming months. Finding high yielding equities with reasonable valuations seems like a good strategy and one that is likely to outperform the market in the near term. One high yielding vehicle I like here is ONEOK Partners (NYSE:OKS) due to its yield, growth prospects and reasonable valuations.

"ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States." (Business description from Yahoo Finance)

7 reasons for income investors to pick up Oneok at $55 a share:

  • OKS yields 4.6%. It has increased dividends by 4% annually over the past five years, but look for that growth to accelerate in coming years (See bullet point 3).
  • The company expects earnings to increase 18% annually from 2012 to 2014.
  • The company also expects dividend growth of 40% over that same time span.
  • The stock has had net insider buying in 2012. OKS is trading at 15 times trailing earnings, a discount to its five year average (26.5)
  • The company has easily beat earnings estimates for the last six quarters. The average beat over consensus earnings has average 20% over the last four quarters.
  • Consensus earnings estimates for FY2012 and FY2013 have risen over the past month.
  • The median analysts' price target on OKS is $62.50. S&P has a "Buy" rating and a $68 price target on the stock.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OKS over the next 72 hours.