ONEOK, Inc. (OKE) has increased its quarterly dividend by 8%, bringing the annualized dividend to $2.24 per share from the previous payout of $2.08 per share.
The company will now pay a quarterly dividend of 56 cents on August 12, 2011 to shareholders of record at the close of business on August 1, 2011. The previous quarterly dividend was 52 cents.
The dividend hike is consistent with ONEOK’s financial guidance for fiscal 2011 that aimed at increasing the dividend 4 cents per share semiannually and its ongoing commitment to deliver attractive returns to its shareholders.
Since January 2006, ONEOK has increased its dividend 12 times, which reflects a 100% increase over the period. The company increased its last dividend in October 2010 to 52 cents, up 17% from the previous dividend of 48 cents. It had also indicated plans to increase its dividend in the range of 50% to 60% from 2011 through 2013, subject to the approval of the board of directors. The company also targets a long-term dividend payout of 60% to 70% of recurring earnings.
ONEOK is strongly positioned in the mid-continent natural gas market. Going forward, we believe that this energy company has the potential to grow earnings above its industry peers through internal development coupled with acquisitions. Furthermore, ONEOK offers an opportunity for income-oriented investors given its above-industry-average dividend yield.
However, the volatile credit markets, utility regulations, dependence on weather and unpredictable commodity prices keep us on the sidelines. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.
ONEOK Inc. is expected to release its second quarter numbers on August 2, 2011. Going forward, the Zacks Consensus Estimates for the second quarter 2011 and fiscal year 2011 are currently at 55 cents per share and $3.23 per share, respectively.
Tulsa, Oklahoma-based ONEOK Inc. is a diversified energy company engaged in all aspects of the natural gas business. ONEOK is the largest natural gas distributor in Oklahoma and Kansas and the third largest natural gas distributor in Texas, providing service as a regulated public utility to wholesale and retail customers. It is the sole general partner and owner of 45.1% of ONEOK Partners L.P. (OKS), one of the largest publicly traded master limited partnerships.
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