uploads///OKEs year to date returns exceed peers

Why Is ONEOK Outperforming Peers in 2016?

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Apr. 27 2016, Updated 8:06 p.m. ET

ONEOK’s total returns

ONEOK (OKE) has generated total returns of 32% so far in 2016. In comparison, Kinder Morgan (KMI), ONEOK Partners (OKS), and Williams Companies (WMB) have generated total returns of 23%, 9%, and -29%, respectively. The Alerian MLP ETF (AMLP) has generated total returns of -5% year-to-date.

ONEOK, which fell steeply in 2015, has recovered in 2016 likely driven by the strong guidance for 2016 released in December 2015 and the completion of the first phase of the Roadrunner Gas Transmission pipeline project in March 2016. ONEOK forms ~2% of the PowerShares High Yield Equity Dividend Achievers ETF (PEY).

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OKE’s distributions

The above graph compares ONEOK’s one-year returns with KMI, OKS, WMB, and AMLP. On April 21, 2016, OKE declared quarterly dividends of 61.5 cents per share for 1Q16. The dividend remained unchanged from the previous quarter. OKE’s dividends had remained flat in 4Q15 as well.

After flat dividends for the first and second quarters of 2015, ONEOK had raised its per-share quarterly dividends by 1.7% in 3Q15. ONEOK had a dividend coverage ratio of ~1.3x in 4Q15. ONEOK currently trades at a dividend yield of ~7.6%. 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 a 0.8% increase in annual dividends in 2016 compared to 2015.

“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,” said Terry K. Spencer, president and chief executive officer of ONEOK, in the 4Q15 earnings release.

Next, we’ll take a look at Wall Street analysts’ price targets for ONEOK. We’ll also discuss its future prospects.

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