Wednesday, December 11, 2024

A Safe Dividend in the Natural Gas Space

Shield

AN OXFORD CLUB PUBLICATION

Loyal reader since January 2024

Wealthy Retirement

View in browser

SPONSORED

Zero Day Options... Government Mandated Events... Target 383% Overnight!

Live 0DTE Spy Trading
 

Discover the exhaustive backtest data that shows how one strategy could have won at an 83% rate.

The average gain was 115% in 24 hours. (winners and losers included).

See all the details here for yourself

Check Out Bryan's Demo Now

Editor's Note: A 300-year-old market phenomenon recently resurfaced...

And researchers have discovered that it can still work wonders in modern times.

Unlock the secret of the "Samurai Code" right here.

- James Ogletree, Managing Editor

A Safe Dividend in the Natural Gas Space

John Oravec, Research Analyst, The Oxford Club

John Oravec

When it comes to energy, oil prices dominate the headlines.

But while the prices at the pump get all the clicks and views, many people overlook America's other main extractable energy reserve: natural gas.

For the everyday American, natural gas powers your home, lights your stove, and heats your water. It's also critical for industries like steel manufacturing, agriculture, and transportation.

A number of factors, including an increase in global demand for liquefied natural gas, technological advancements, and U.S. policy support, have contributed to a recent increase in natural gas production.

We've seen a 41% increase in natural gas production in the past 10 years alone, which has been a massive boon for domestic energy companies.

Chart: Natural Gas Production Continues to Rise
View larger image
 

One in particular that hit my radar this week was Oneok (NYSE: OKE) - pronounced "one oak."

Based out of Oklahoma, Oneok is no stranger to the natural gas industry. The company holds a dominant position in natural gas extraction within the central United States.

While Oneok recently added oil and petroleum extract to its revenue makeup, natural gas gathering, processing, and transportation still make up the majority of its operations.

The company currently manages over 50,000 miles of natural gas pipeline. In the third quarter, its total amount of natural gas processed increased by 5% year over year to 3.236 trillion British thermal units per day.

Oneok also sports a respectable 3.7% dividend yield, and the stock is up 56% in the past year.

That's all great... but we're here to find out one thing and one thing only: whether Oneok's dividend is safe or at risk of being cut.

Let's dig in a little deeper and see what we find out...

SPONSORED

The Ultimate Passive Income Investment

Relaxing with Passive Income
 

It's not a stock, bond or private company...

But this little-known alternative investment could hand you BIG MONTHLY INCOME.

CLICK HERE TO FIND OUT WHAT IT IS

First, as always, we need to look at Oneok's free cash flow growth.

In 2020, Oneok's free cash flow was a startling -$296 million, but since then, it's been able to steadily grow its reserve. The estimates for 2024 are above $3 billion - a 7% increase from 2023 - and estimates for 2025 are for 54% growth to over $4.6 billion.

Chart: Oneok's Sharp Turnaround
View larger image
 

Oneok's 2023 dividend payout ratio sat at 65%. That was comfortably below our 75% threshold.

However, in January of this year, the company increased its dividend from $0.955 to $0.99 per share. That caused the payout ratio for 2024 to rise to around 79%, which knocks the stock's grade down a level.

Lastly, when we look at the company's dividend history, I am happy to say that Oneok hasn't had any dividend cuts in the past 10 years.

Since 2002, the company has grown its dividend nearly every year without a single cut.

With only one mark against it, I can confidently say that Oneok's dividend is safe.

Dividend Safety Rating: B

Dividend Grade Guide
 

What stock's dividend safety would you like us to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we've written about your favorite stock recently. Just click on the word "Search" at the top right part of the Wealthy Retirement homepage, type in the company name, and hit "Enter."

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

Leave a Comment

3-Minute Stock Secret Message: Learn the Little-Used Technique That Delivered Gains up to 227% in a Single Month

Is the Trend Really Your Friend?

New IPO Signs MAJOR Deal with Apple Until 2040. Will It Be the Next Trillion Dollar Company?

The Hero's Journey: From Debt to Financial Freedom

SPONSORED

Man Who Called Nvidia at $1.10: THIS TRUMP TRADE Could Create the Next Trillion Dollar Company

AG Magnificent Seven
 

Biggest Tech Firms in the World are Loading Up! And Apple Just Signed a Deal Through 2040. Get the Whole Story on the #1 Trump Stock for His Second Term.

No comments:

Post a Comment

Bicam committee keeps slashed budget for VP Sara

No go, no way: In the end, the bicameral conference committee backed the House move to trim VP Sara Duterte's office budget next year by...