Diversified energy company, ONEOK Inc. (OKE) recently announced 1.5 cent (or 2.5%) hike in its quarterly cash dividend to 60.5 cents per share for the fourth quarter of 2014. This translates into a 3% increase from the prior dividend. The increased dividend will be paid on Feb 13, 2015, to shareholders of record as of Jan 30, 2015.
ONEOK’s dividend track record for the last four quarters is quite impressive. The company has consistently stepped up its dividend with the payout now up 51.3% over the past one year. The company’s annual cash dividend now stands at $2.42 per share.
Post the dividend increase announcement, dividend yield of ONEOK now stands at 5.72%, higher than the industry average of 3.65%.
This dividend hike came on the heels of strong third-quarter results. ONEOK reported adjusted earnings of 40 cents per share, surpassing the Zacks Consensus Estimate of 38 cents by 5.3%. Quarterly earnings also surged 14.3% from 35 cents a year ago.
ONEOK maintains a sound liquidity and cash position giving it more flexibility and investment options. As of Sep 30, 2014, the company had a cash balance of $151.4 million compared with $145.6 million as of Dec 31, 2013.
The company’s effort to improve shareholder value is evident from its set targets. ONEOK currently targets average dividend growth of 10% over 2015-2016. The company hopes to raise the average annual dividend to the range of 20%–25% between 2013 and 2016, subject to the approval of its board.
Apart from ONEOK, its peer Atmos Energy Corp. (ATO) also increased its quarterly cash dividend by 2 cents to 39 cents on Nov 5, 2014. The company’s fiscal 2014 annual dividend stood at $1.48 per share.
Zacks Rank
Tulsa, OK-based ONEOK currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry are Southwest Gas Corp. (SWX) and WGL Holdings Inc. (WGL). Both these companies currently sport a Zacks Rank #1 (Strong Buy).
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