ONEOK Partners L.P. (OKS) announced that its board of directors has approved of a 0.5 cent increase in its quarterly cash distribution rate. The new distribution rate of 73 cents per unit will be effective from the fourth quarter of 2013 and is scheduled to be paid on Feb 14, 2014, to unitholders of record as of Jan 13, 2014.
The annualized cash distribution rate of the partnership comes to $2.92 per unit, up 0.7% from the prior rate of $2.90 per unit. ONEOK Partners has increased its distribution rate by an impressive 83% from Apr 2006.
The steady performance of ONEOK Partners has allowed it to increase its quarterly cash distribution regularly over the past 16 quarters. In Dec 2013, the partnership announced its intention to increase the distribution rate by 1.5 cents per quarter in 2014, subject to the approval of its board of directors and general partner and attain annual distribution growth of 6% to 8% in the 2013 to 2016 time frame.
ONEOK Partners plans to invest $2.25 billion in 2014, of which $2.1 billion will be in growth capital. This is part of the long-term plan of the partnership to invest $6.0 billion to $6.4 billion in growth projects between 2010 and 2016.
The partnership presently expects 2014 net income in the range of $975 million to $1.075 billion, nearly a 27% increase from the expected 2013 net income guidance of $790 million to $830 million.
We believe that the increase in natural gas and natural gas liquids usage in the U.S., along with the improved return from investment made by ONEOK Partners in growth projects will enable it to distribute excess cash among its unitholders.
Apart from ONEOK Partners another pipeline operator Plains All American Pipeline LP (PAA) recently increased its quarterly cash distribution to 61.50 cents per unit, reflecting an annual hike of 9.3%. The increase in the distribution rate is in sync with Plains All American Pipeline’s strategy of increasing the 2014 distribution rate by 10% year over year.
ONEOK Partners currently has a Zacks Rank #2 (Buy). Other well-placed oil and gas pipeline stocks include Enbridge Energy Management LLC (EEQ) and Summit Midstream Partners, LP (SMLP). Both these stocks also hold a Zacks Rank #2 (Buy).
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