ONEOK Increases Quarterly Dividend and Announces Share Repurchase Program

Rhea-AI Summary

ONEOK, Inc. (NYSE: OKE) has announced a 3.7% increase in its quarterly dividend to 99 cents per share, resulting in an annualized dividend of $3.96 per share. The company's board of directors has also authorized a $2 billion share repurchase program, aiming to target 75% to 85% of cash flow from operations after capital expenditures over the next four years. ONEOK remains committed to its debt-to-EBITDA ratio of approximately 3.5 times.

Positive

• 3.7% increase in quarterly dividend
• $2 billion share repurchase program authorized
• Targeting 75% to 85% of cash flow from operations after capital expenditures for dividends and share repurchases
• Commitment to capital-growth opportunities and debt reduction

Negative

• None.

Insights

Financial Analyst

The announcement by ONEOK, Inc. regarding the increase in its quarterly dividend by 3.7% and the initiation of a $2 billion share repurchase program represents a strategic move to enhance shareholder value. The commitment to return 75% to 85% of cash flow from operations after capital expenditures to shareholders is a significant indicator of the company's financial health and operational efficiency. This approach not only rewards current investors with a higher yield but also signals confidence in the company's cash-generating capabilities.

From a financial perspective, the share repurchase program can be seen as a method to optimize the company's capital structure. By buying back shares, ONEOK could potentially improve earnings per share (EPS) metrics, assuming the repurchase is executed at favorable market conditions. It is also noteworthy that the company has been able to repurchase its outstanding notes at a discount, which may reduce interest expenses and improve net income over time.

Market Research Analyst

ONEOK's strategy to focus on high-return growth opportunities while maintaining a disciplined capital allocation framework is indicative of a mature company seeking to balance growth with shareholder returns. The targeted annual dividend growth rate of 3% to 4% aligns with industry norms for energy infrastructure companies, which tend to provide stable and predictable returns. This balanced approach could make ONEOK more attractive to a broader investor base, including income-focused and value investors.

Moreover, the company's position as a leading midstream operator in North America, with a vast pipeline network, is critical in the context of global energy demand and security. The energy sector's performance is often correlated with geopolitical events and macroeconomic factors and companies like ONEOK play a pivotal role in ensuring energy supply continuity. The commitment to maintaining a target debt-to-EBITDA ratio of approximately 3.5 times is an additional reassurance to stakeholders about the company's prudent financial management.

Energy Sector Analyst

ONEOK's operational focus on energy infrastructure, particularly in midstream services, is a cornerstone of its business model. The midstream sector, which involves the transportation, storage and wholesale marketing of crude oil, natural gas and natural gas liquids, is less sensitive to commodity price fluctuations compared to upstream and downstream segments. This allows for more predictable cash flows, which is reflected in ONEOK's confident outlook on cash flow generation and subsequent shareholder returns.

It is also important to consider the broader energy landscape, where infrastructure companies are essential for the transition to more sustainable energy sources. ONEOK's infrastructure and services will continue to be in demand as long as natural gas and NGLs are seen as transitional fuels towards lower-carbon energy systems. The company's strategic initiatives, including capital-growth opportunities, could be aligned with this transition, ensuring its relevance in the evolving energy market.

Raises Quarterly Dividend 3.7%

Authorizes $2 Billion Share Repurchase Program

Combination of Dividends and Share Repurchases to Target 75% to 85% of Cash Flow From Operations After Capital Expenditures

TULSA, Okla., Jan. 17, 2024 /PRNewswire/ -- The board of directors of ONEOK, Inc. (NYSE: OKE) today increased its quarterly dividend to 99 cents per share, an increase of 3.7%. This increase results in an annualized dividend of $3.96 per share.

The dividend is payable Feb. 14, 2024, to shareholders of record at the close of business Jan. 30, 2024.

For future dividend increases, ONEOK expects to target an annual dividend growth rate ranging between 3% to 4%.

ONEOK's board has also authorized a $2 billion share repurchase program and targets it to be largely utilized over the next four years. This program will complement the dividend growth rate as a key pillar of shareholder return in the future.

The combination of common dividends and share repurchases is expected to trend towards a target of approximately 75% to 85% of forecasted cash flow from operations after capital expenditures over the next four years, allowing ONEOK to continue pursuing additional high-return growth opportunities, debt reduction or share repurchases.

ONEOK has also opportunistically repurchased approximately $300 million of face value of its outstanding notes at a discount to par value during the fourth quarter of 2023 and finished the year with approximately $340 million of cash on hand. ONEOK remains committed to its previously stated target debt-to-EBITDA ratio of approximately 3.5 times.

"ONEOK is poised to generate substantial cash flow from operations in the coming years," said Pierce H. Norton II, ONEOK president and chief executive officer. "Our commitment to capital-growth opportunities continues as our highest priority in our capital allocation strategy. This priority, combined with dividend growth and share repurchases, reinforces our commitment to maximizing total shareholder return and our belief that ONEOK represents a highly compelling investment opportunity," added Norton.

At ONEOK (NYSE: OKE), we deliver energy products and services vital to an advancing world. We are a leading midstream operator that provides gathering, processing, fractionation, transportation and storage services. Through our more than 50,000-mile pipeline network, we transport the natural gas, natural gas liquids (NGLs), refined products and crude that help meet domestic and international energy demand, contribute to energy security and provide safe, reliable and responsible energy solutions needed today and into the future. As one of the largest diversified energy infrastructure companies in North America, ONEOK is delivering energy that makes a difference in the lives of people in the U.S. and around the world.

ONEOK is an S&P 500 company headquartered in Tulsa, Oklahoma.

For information about ONEOK, visit the website: www.oneok.com. For the latest news about ONEOK, find us on LinkedIn, Facebook, X and Instagram.

Some of the statements contained and incorporated in this news release are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected levels of quarterly and annual dividends), liquidity, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities laws and other applicable laws.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "might," "outlook," "plan," "potential," "project," "scheduled," "should," "target," "will," "would" and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. These and other risks are described in greater detail in Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and in the other filings that we make with the Securities and Exchange Commission (SEC), which are available on the SEC's website at www.sec.gov. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and, other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

Analyst Contact:	Megan Patterson
	918-561-5325
Media Contact:	Brad Borror
	918-588-7582

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SOURCE ONEOK, Inc.

FAQ

What is the ticker symbol for ONEOK, Inc.?

The ticker symbol for ONEOK, Inc. is OKE.

What is the increase in the quarterly dividend for ONEOK, Inc.?

The quarterly dividend for ONEOK, Inc. has been increased by 3.7% to 99 cents per share.

What is the annualized dividend after the increase for ONEOK, Inc.?

The annualized dividend for ONEOK, Inc. is now $3.96 per share.

What is the value of the share repurchase program authorized by ONEOK, Inc.?

ONEOK, Inc. has authorized a $2 billion share repurchase program.

What is the target percentage of cash flow for dividends and share repurchases for ONEOK, Inc.?

ONEOK, Inc. targets 75% to 85% of cash flow from operations after capital expenditures for dividends and share repurchases.