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Key Factors that Could Drive OKE’s Dividend Growth


Mar. 1 2018, Published 12:22 p.m. ET

ONEOK’s dividend outlook

ONEOK’s (OKE) dividend yield of 5.4% has been driven by dividend growth. Its dividend grew 11.0% in 2017 and 1.0% in 2016. Its dividend growth in 2017 and 2018, as well as its price loss in 2017, has helped its yield expand. OKE’s dividend is projected to grow 13.0% in 2018.

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What is OKE’s projected dividend payout?

ONEOK’s (OKE) had a dividend payout of 148.0% in 2016. Its projected dividend payout is 160.0% in 2017 and 128.0% in 2018. The company has been able to generate a positive free cash flow balance since 2016 due to higher operating cash flow and lower capital expenditures.

What drove OKE’s revenue growth?

ONEOK’s (OKE) revenues grew 15.0% and 34.0% in 2016 and 9M17, respectively. Commodity sales and services drove its revenues in both periods.

Higher fee-based earnings in its Natural Gas Gathering and Processing, Natural Gas Liquids (or NGL), and Natural Gas Pipelines segments and transportation services drove revenues in both periods.

Dividend ETFs with exposure to OKE

Among the dividend ETFs with exposure to OKE, the PowerShares High Yield Equity Dividend Achievers ETF (PEY) has a PE (price-to-earnings) ratio of 18.7x and a dividend yield of 3.1%. The Global X SuperDividend ETF (SDIV) has a PE ratio of 11.6x and a dividend yield of 6.8%.

We’ll discuss ONEOK’s EPS (earnings per share) performance and future revenue and EPS drivers in the next part of this series.


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