ONEOK Inc's Dividend Analysis
An In-depth Look at ONEOK Inc's Dividend Performance and Sustainability
ONEOK Inc (NYSE:OKE) recently announced a dividend of $0.96 per share, payable on 2023-11-14, with the ex-dividend date set for 2023-10-31. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into ONEOK Inc's dividend performance and assess its sustainability.
Understanding ONEOK Inc's Business
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ONEOK provides natural gas gathering, processing, storage, and transportation as well as natural gas liquids transportation and fractionation. It owns extensive assets in the midcontinent, Permian, and Rocky Mountain regions.
ONEOK Inc's Dividend History
ONEOK Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. ONEOK Inc has increased its dividend each year since 1999. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 24 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
ONEOK Inc's Dividend Yield and Growth
As of today, ONEOK Inc currently has a 12-month trailing dividend yield of 5.81% and a 12-month forward dividend yield of 5.84%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, ONEOK Inc's annual dividend growth rate was 1.90%. Extended to a five-year horizon, this rate increased to 6.10% per year. Over the past decade, ONEOK Inc's annual dividends per share growth rate stands at an impressive 11.40%.
Based on ONEOK Inc's dividend yield and five-year growth rate, the 5-year yield on cost of ONEOK Inc stock as of today is approximately 7.81%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, ONEOK Inc's dividend payout ratio is 0.70. This may suggest that the company's dividend may not be sustainable.
ONEOK Inc's profitability rank offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ONEOK Inc's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Growth Prospects for ONEOK Inc
To ensure the sustainability of dividends, a company must have robust growth metrics. ONEOK Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
ONEOK Inc's revenue has increased by approximately 26.80% per year on average, a rate that outperforms than approximately 79.63% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, ONEOK Inc's earnings increased by approximately 7.70% per year on average, a rate that outperforms than approximately 36.38% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 16.20% outperforms than approximately 59.31% of global competitors.
Conclusion
In conclusion, while ONEOK Inc's dividend payments and growth rate are impressive, investors must also consider the company's high payout ratio. However, its strong profitability and growth metrics suggest a promising future. As always, investors are advised to conduct their own comprehensive analysis before making any investment decisions.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
