By Mike Cintolo, Cabot Top Ten Trader

Omega Healthcare Investors (OHI) is a U.S. company that operates as a real estate investment trust, investing in healthcare facilities, with an emphasis on skilled nursing facilities.

At the end of last year, the company owned or held mortgages on 476 skilled nursing facilities, assisted living facilities and other specialty hospitals. All told, the company controls a little over 55,000 beds in 33 states that are operated by 46 third-party companies.

Omega goes out of its way to make it clear that it's not in the healthcare business; it's a REIT that seeks quality long-term investments in healthcare properties that will provide favorable risk/reward ratios to its investors.

REITs avoid paying federal income taxes by returning at least 90% of their taxable income to investors, and in Omega's case, that translates to a forward annual dividend yield of 6.4%.

The company's fourth quarter earnings report met expectations with a 16% increase in quarterly earnings on a 25% gain in revenues. The after-tax profit margin on 35.7% was also the fourth consecutive quarter above 30%. The dividend rate was raised in January, building on a similar increase last October.

With an aging cohort of Baby Boomers close to turning 70, the outlook for a well-run health care REIT like Omega is bright.

OHI finished a significant correction in August 2011, and has been in a general uptrend since. The stock has had three major consolidations during this rally, with the latest lasting from the end of July 2012 until the end of December.

The stock caught the market's January updraft, then broke out in February on good earnings news and has been trading sideways since February 13, inching higher at the end of last week.

OHI looks like a good choice for both long-term investors seeking strong dividends and growth investors who appreciate a stock in a price uptrend with a reasonable price-to-earnings ratio of just 12. Try to buy on a dip toward $27.50 per share.

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