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Why Did ONEOK Stock Fall 1.8% in After-Hours Trading?

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OKE fell 1.8%

ONEOK (OKE) reported its 4Q15 results after the Market closed on February 22, 2016. OKE fell 1.8% in after-hours trading. This was the initial price reaction after the earnings announcement. The company’s 4Q15 EBITDA (earnings before interest, tax, depreciation, and amortization) increased 6.6% year-over-year, although it missed the estimates. ONEOK also reaffirmed its 2016 guidance. The continued weakness in its Natural Gas Gathering and Processing segment likely contributed to the initial decline.

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Over the last year, ONEOK has generated total returns of -51%. In comparison, Kinder Morgan (KMI), ONEOK Partners (OKS), and Williams Companies (WMB) have generated total returns of -55%, -32%, and -65%, respectively, over the same time frame. The Alerian MLP ETF (AMLP) returned -35% over this period.

ONEOK’s dividends

The above graph compares ONEOK’s one-year returns with KMI, OKS, WMB, and AMLP. After flat dividends for the first and second quarters of 2015, ONEOK raised its per-share quarterly dividends by 1.7% in 3Q15. On January 21, 2016, ONEOK announced a quarterly dividend of $0.62 per share for 4Q15. This dividend is unchanged from its 3Q15 dividend.

ONEOK had a dividend coverage ratio of ~1.3x in 4Q15. ONEOK currently trades at a dividend yield of ~11.4%. You can read more about ONEOK’s dividends in ONEOK Focuses on Existing Businesses to Drive Growth.

ONEOK expects its quarterly dividends to remain flat at the current $0.62 per share in 2016. This outlook would mean an 0.8% increase in annual dividends in 2016 compared to 2015.

Terry K. Spencer, president and chief executive officer of ONEOK, said, “We expect to achieve our 2016 financial guidance, including our expectation to maintain dividend coverage of approximately 1.3 times and to have approximately $250 million of free cash flow after dividends and cash on hand available to support ONEOK Partners if needed.”

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