Zacks_Analysts' Blog : ONEOK Inc. Boosts Dividend - Analyst Blog

ONEOK Inc. (OKE) has increased its quarterly dividend by 9%, bringing the annualized dividend to $2.44 per share from the previous payout of $2.24 per share. This reflects the company’s continued strong performance and robust cash flow from its natural gas distribution segment.

The company will now pay a quarterly dividend of 61 cents per share compared with the prior quarterly dividend of 56 cents per share. The announced fourth quarter dividend will be paid on February 14, 2012, to shareholders of record at the close of business on January 31, 2012.

In September 2011, the company had also indicated its plans to increase its dividend by 50% by 2014 and maintain a long-term dividend payout of 60% to 70% of recurring earnings.

We are impressed by the company’s practice of rewarding shareholders by constantly raising dividends. The company’s hike in the quarterly dividend by a nickel exceeds its own expectations of a 4 cent increase specified during September last year in its guidance. Since January 2006, ONEOK has increased its dividend 13 times, which reflects a 118% increase over the period. It increased its last dividend in July 2011 to $0.56, up 7.7% from the preceding payout of $0.52.

The company had also called for another 4 cent rise in the quarterly dividend to be paid in July 2012. We believe that if the company continues to generate robust cash flow from its natural gas distribution segment, it might meet and even outstrip its expectation in July.

In December 2011, OGE Energy Corporation (OGE), an ONEOK peer, also increased its quarterly dividend by 4.67%, bringing the annualized dividend to $1.57 per share from the previous payout of $1.50 per share.

Tulsa, Oklahoma-based ONEOK Inc. is a diversified energy company engaged in all aspects of the natural gas business. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.