Oneok is raising its dividend by 4%.
The pipeline giant backs its high-yielding dividend with stable cash flows and a strong financial profile.
The company has lots of visible growth on the horizon.
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Oneok (NYSE: OKE) offers investors an attractive dividend yield today. At 5.5%, it’s several times above the S&P 500‘s dividend yield, which is approaching its record low at around 1.2%.
While higher-yielding dividend stocks can have higher risk profiles, that’s not the case with Oneok’s payout. It’s on rock-solid ground. That’s enabling the pipeline company to give its investors another raise.
Oneok recently declared its latest quarterly dividend payment. The diversified energy midstream company will pay $1.07 per share ($4.28 annualized) on Feb. 13 to investors who hold shares by Feb 2. That’s a 4% increase from its prior level.
That continues the pipeline company’s quarter-century track record of delivering stable to growing dividends for its investors. While Oneok hasn’t increased its dividend every year during that period, it has nearly doubled its dividend payment over the past decade. It has a much better track record than its closest peers in the pipeline industry, most of which have reduced their dividend payments at some point over the past 10 years.
Oneok’s current target is to grow its dividend by 3% to 4% each year. That’s a very achievable goal, given its financial strength and the visible growth it has coming down the pipeline.
The pipeline company’s diversified midstream operations generate very stable cash flow as long-term contracts and government-regulated rate structures underpin the bulk of its assets. Additionally, the company has an investment-grade credit rating backed by a conservative 3.5 times leverage ratio.
Oneok has grown significantly in recent years by completing a series of large-scale acquisitions. It sees the potential of capturing several hundred million dollars in additional cost savings and commercial synergies from these deals, including $250 million targeted for 2026.
Meanwhile, the company has several organic expansion projects under construction to expand its midstream operations. It currently has projects underway that should enter commercial service through the middle of 2028, including joint ventures (JVs) to build a new LPG export terminal and a large-scale natural gas pipeline. These projects will provide Oneok with incremental sources of stable cash flow as they enter commercial service over the next few years.
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