Ample operating cash flow is a critical factor for a company's
ability to increase a cash dividend, let alone pay one, to
) sizes up well in this regard.
In 2011, the Tulsa, Okla.-based energy pipeline firm earned
$1.67 a share, up 8% vs. a year ago. Cash flow from operations
was nearly double that figure at $3.25 per share.
In 2012, Oneok's EPS edged 2% lower to $1.64. Meanwhile, its
cash flow per share rose slightly to $3.33.
Operating cash flow minus capital expenditures will tell you
how much free cash flow a company produces. It is from free cash
flow that a company has the ability to take shareholder friendly
moves such as buying back and retiring shares and paying
One may be concerned with the huge long-term debt seen on
Oneok's balance sheet. Last year, the long-term debt to
shareholders equity ratio grew to 306%, a staggering level. Among
the larger gas transport and storage companies, this is indeed
high. However, Oneok also boasts outstanding profit stability,
which lowers the risk of default. Oneok's five-year Earnings
Stability factor ranks 6 on a scale of zero (stable) to 99
Oneok (pronounced "One-Oak") is the general partner of Oneok
Partners, a leader in gathering, processing, storing and
transporting natural gas across the U.S. Oneok also owns a major
supply system of natural gas liquids (NGLs) that connects the
so-called Mid-Continent and Rocky Mountain regions with key
energy market centers.
On Tuesday, Oneok Partners announced plans to invest an extra
$650 million to $780 million in natural gas processing projects
in the Williston Basin in North Dakota.
On Nov. 14, Oneok paid a quarterly cash payout of 38 cents a
share. The annualized yield is 2.6%, higher than the S&P
500's yield of 2.39%. The company hiked its dividend by 2 cents
in July, its 16th increase since January 2006.