Yahoo Finance ONEOK (NYSE:OKE) Has Announced That It Will Be Increasing Its Dividend To $0.955
ONEOK, Inc. (NYSE:OKE) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of May to $0.955. This takes the dividend yield to 5.8%, which shareholders will be pleased with.
Check out our latest analysis for ONEOK
ONEOK's Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, the company's dividend was much higher than its earnings. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.
EPS is set to grow by 35.2% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 78% - on the higher side, but we wouldn't necessarily say this is unsustainable.
ONEOK Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $1.32, compared to the most recent full-year payment of $3.82. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
ONEOK's Dividend Might Lack Growth
The company's investors will be pleased to have been receiving dividend income for some time. ONEOK has impressed us by growing EPS at 24% per year over the past five years. While EPS is growing rapidly, ONEOK paid out a very high 98% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.
ONEOK's Dividend Doesn't Look Sustainable
Overall, we always like to see the dividend being raised, but we don't think ONEOK will make a great income stock. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for ONEOK you should be aware of, and 1 of them doesn't sit too well with us. Is ONEOK not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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