) has increased its quarterly dividend by 9% to 36 cents per
share from its earlier payment of 33 cents per share. As a result
of this revision, the company's annualized dividend will be $1.44
per share. The new annual dividend yield will be 3.2%, which will
be higher than the industry average of 2.45%. This dividend-hike
is effective from the fourth quarter of 2012 and will be payable
on Feb 14, 2013 to shareholders of record as of Jan 31, 2013.
Previously, ONEOK had increased its dividend in Jul 2012.
Quarterly dividend payout climbed 8% to 33 cents per share of
common stock from 30.5 cents per share on a post-stock-split
basis. The company values its owners and has been trying to boost
their income by hiking the dividend payment each year for the
last 7 years.
It is evident from ONEOK's dividend-payment history that the
company is always on the lookout for maximizing its shareholders'
wealth. In Sep 2012, the company expressed its intention to raise
its total dividend by nearly 65% - 70% in the time span of 2012
to 2015. In full-year 2013, ONEOK intends to increase its
dividend by 3 cents semiannually, subject to the required
approvals. In the long term, it is targeting a dividend payout
ratio in the range of 60% - 70%.
ONEOK's third-quarter 2012 cash flow from operating activities
was $762.3 million and cash balance was $978.8 million as of Sep
30, 2012. We believe strong liquidity position, including a
credit facility of approximately $1.7 billion, will be sufficient
to meet the company's anticipated cash requirements and fund
future growth opportunities over the next couple of years.
The market reacted positively toward the dividend-hike and the
share price increased 2% and closed at $45.39 as of Jan 16, 2013.
As we know that strong financial performance of ONEOK increases
the investors' expectation, the company's continuous effort
toward revision in dividend payment at regular intervals is able
to boost their confidence.
Recently, another utility provider
OGE Energy Corporation
) increased its quarterly dividend by 6.37% to 41.75 cents per
share from the prior payment of 39.25 cents per share. The
annualized dividend will be $1.67 per share from the earlier
payout of $1.57 per share.
Though ONEOK has a strong financial position and numerous future
growth projects, we are skeptical about unstable commodity
prices, over-dependence on weather patterns, stringent utility
regulations and volatile credit markets, which can challenge the
company's future performance.
Tulsa, Oklahoma-based ONEOK Inc. is a diversified energy company,
operating as a natural gas distributor, primarily in the U.S. The
company currently has a short-term Zacks Rank #4 (Sell).
OGE ENERGY CORP (OGE): Free Stock Analysis
ONEOK INC (OKE): Free Stock Analysis Report
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