ONEOK (OKE) To Reward Shareholders With 12% Dividend Hike

ONEOK, Inc.’s (NYSE:OKE) board of directors announced a quarterly dividend hike to 86 cents per share, up 12% year over year. This will result in an annualized dividend of $3.44.

Details of the Dividend Hike

The revised quarterly dividend will be payable on Feb 14, 2019 to shareholders of record as of Jan 28, 2019. The company has been paying dividend since 1972. It expects 9.6% EPS growth through 2018-2020 and 10.8% dividend growth though 2018-2020.

The current annualized dividend yield of the company is 5.61% higher than the industry’s 2.70% and the S&P 500 Composite’s 1.99%. Increase in distributable income indicates the company’s strong balance sheet and cash flow position.

Strong cash flow generation capability is enabling ONEOK to strengthen balance sheet and increase shareholders’ value through the payment of dividend. The company expects cash flows from operations to sufficiently fund dividend payments.

What Led to the Dividend Hike?

ONEOK Partners is the primary growth vehicle for ONEOK. The completion of acquisition of the remaining interest in ONEOK Partners is going to be accretive to distributable cash flow from 2017 through 2021.

The Sterling I and II pipelines are currently shipping purity products and running at full capacity. ONEOK is poised to benefit from the Sterling III Pipeline expansion, West Texas LPG Pipeline expansion and Canadian Valley natural gas processing facility expansion. These projects are fully subscribed under long-term fee-based commitments.

Moreover, increase in drilling activities in high productive regions will increase demand for the company’s midstream services. The company expects production volumes in the STACK and SCOOP areas to improve demand for pipeline services.

Utilities Continues to Reward Shareholders

Apart from ONEOK, other utilities are also revising dividend rates at regular intervals.

On Oct 23, 2018, American Electric Power Company’s (NYSE:AEP) board of directors declared a regular quarterly cash dividend of 67 cents per share on the company's common stock, up 8.1%.

On Dec 6, 2018 WEC Energy Group’s (NYSE:WEC) board of directors announced a quarterly dividend hike on the company's common stock to 59 cents per share in the first quarter of 2019.

On Dec 7, 2018 PNM Resources’ (NYSE:PNM) board of directors announced a quarterly dividend hike to 29 cents per share from 26.5 cents.

Zacks Rank & Price Performance

ONEOK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ONEOK’ shares have moved up 5.3% in the past 12 months compared with the industry’s rise of 4.7%.

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