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ONEOK Is on Track to Meet 2015 Guidance

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Oneok announced 2015 guidance in February

ONEOK (OKE) revised its 2015 guidance in February 2015. It reduced its 2015 cash flow available for dividends guidance to $570–$650 million compared to a previous guidance of $580–$660 million announced in December 2014.

At the same time, ONEOK revised its 2015 projected dividend increase to 4%–8% over 2014. It had earlier provided a guidance of 14%. The dividend coverage ratio for 2015 is expected to be 1.21x.

ONEOK has reaffirmed its guidance for the year in its first, second, and third quarter earnings releases.

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Results year-to-date

ONEOK’s cash flow available for dividends for the nine months ended September 30, 2015, is $474.7 million. So it’s on track to meet its guidance for cash flow available for dividends. ONEOK’s dividend increase for 2015 would be 4.7% compared to 2014, even if it doesn’t increase its dividend for 4Q15 from its current $0.62 per share.

OKE’s dividend coverage ratio for the nine months ended September 30, 2015, is 1.24x. ONEOK also seems to be on track to meet its 2015 guidance on this count.

ONEOK’s price targets

The median target price for ONEOK in a year provided by the analysts surveyed by Bloomberg is $40. The low and high target price for the stock over the same period is $35 and $48, respectively. The median target price implies a 97% price return in a year from ONEOK’s current price of $20.31.

Even the low target price of $35 is 72% above OKE’s current price. About 25% of the analysts surveyed have rated ONEOK a “buy,” while 63% have rated it a “hold,” and 12% have rated it a “sell.”

ONEOK forms ~2% of the PowerShares High Yield Equity Dividend Achievers ETF (PEY), which principally selects stocks based on dividend yield and consistent growth in dividends.

As for other midstream companies, 50% rated Spectra Energy (SE) a “buy,” and 50% rated Enbridge Energy Partners (EEP) a “buy.” About 88% of the analysts surveyed rated Enterprise Products Partners (EPD) a “buy.”

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