ONEOK Partners
engages in gathering, processing, storing and transporting natural gas in the US . This partnership has earned a 14-20% return
on equity over the last five years and has grown profits and dividends at a
7-8% rate. Earnings and dividends
should continue to advance at a moderate pace as a result of:
(1) a broadly
diversified geographic and customer base,
(2) strong cash
flow allowing acquisitions and new projects.
(3) consistently
raises cash distribution.
Negatives:
(1) it is
exposed to the fluctuations of commodity [natural gas] prices,
(2) it doesn’t
own all the land on which its pipelines and other facilities are located;
hence, costs can rise as a result of contract renewal,
(3) its
operations are subject to numerous federal, state and local regulations.
OKS is rated A
by Value Line, has a 53% debt to equity ratio and its stock yields 5.3%. If the company continues to grow its dividend
at a 6% rate, the total return on this stock makes it an attractive bond
substitute.
Statistical Summary
Stock Dividend Payout
# Increases
Yield Growth Rate Ratio
Since 2003
OKS 5.3% 6% 63 6
Debt/ EPS Down Net Value Line
Equity ROE Since 2003 Margin Rating
OKS 53% 21% 3 12% A
Chart
Note:
OKS stock made great initial progress off its March 2009 low, quickly
surpassing the downtrend off its May 2007 high (red line) and the November 2008
trading high (green line). Long term the
stock is in an uptrend (straight blue lines).
Intermediate term, OKS is in a trading range (purple lines). The High Yield Portfolio owns an 85% position
in OKS. The upper boundary of its Buy
Value Range Sell
Half Range
9/13
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