{"id":39255,"date":"2023-07-22T21:48:36","date_gmt":"2023-07-23T01:48:36","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/top-tier-income-oneoks-undervalued-6-yield-nyseoke\/"},"modified":"2023-07-22T21:48:39","modified_gmt":"2023-07-23T01:48:39","slug":"top-tier-income-oneoks-undervalued-6-yield-nyseoke","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=39255","title":{"rendered":"Top-Tier Income: ONEOK’s Undervalued 6% Yield (NYSE:OKE)"},"content":{"rendered":"
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Introduction<\/h2>\n

While I do not own ONEOK, Inc. (NYSE:OKE<\/span>)<\/strong> personally, it’s a holding in a lot of portfolios that I advise, and a lot of friends of mine own it – even the ones who aren’t even focused on dividend income.<\/p>\n

While OKE has a very volatile history, I believe that the company is one of the best high-yields in the energy space. This midstream C-corporation (it does NOT issue a K-1 form!) not only comes with a 6% yield, but it also has improved balance sheet health, its footprint in the North American energy industry, and its ability to generate long-term growth, paving the road for consistent dividend growth.<\/p>\n

In this article, I’ll share my thoughts on this stock and explain why ONEOK might be the right pick for income-focused investors.<\/p>\n

Natural Gas Is The Place To Be<\/span> <\/h2>\n

OKE isn’t for the faint of heart. At least not in the past. In the past ten years, the company has been through two major sell-offs. The first one started in 2014, when energy commodity prices fell off a cliff, raising doubts about whether midstream operators would run into troubles with lower volumes. At that time, most had very high debt loads due to investments in growth and barely (if any) positive free cash flow. It was truly a horrible period for investors in this space. Needless to say, OKE survived and bounced back quickly.<\/p>\n

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FINVIZ<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The 2020 sell-off isn’t that far ago. Back then, the pandemic triggered caused a scenario where nobody knew how bad things could get.<\/p>\n

While the initial panic was bad, OKE quickly bounced back again as it became clear that the world was, in fact, not ending.<\/p>\n

Now, OKE is now in a much healthier situation – both financially and when it comes to its business environment.<\/p>\n

Having said that, OKE isn’t just a random midstream company that connects producers to customers. OKE is a giant in the natural gas space.<\/p>\n

According to the company (emphasis added):<\/p>\n

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We are connected to supply in natural gas and NGL producing basins and have significant basin diversification, including the Williston, Permian, Powder River and DJ Basins, and the SCOOP and STACK areas.<\/strong> In our Natural Gas Gathering and Processing segment, we have more than 3 million dedicated acres in the Williston Basin and approximately 300,000 dedicated acres in the SCOOP and STACK areas. In our Natural Gas Liquids segment, we are the largest NGL takeaway provider in the Williston and Powder River Basins; Oklahoma, including the SCOOP and STACK areas; Kansas; and the Texas Panhandle<\/strong>. We also have a significant presence in the Permian Basin.<\/em><\/em><\/p>\n<\/blockquote>\n

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ONEOK Inc.<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

I believe that the company and its shareholders have at least two major tailwinds.<\/p>\n