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Participant ○○○

For INCOME!! ONEOK, unique among S&P 500

 

There's an interesting graphic in the most recent presentations of ONEOK (OKE).  I would post it if I knew how.  I never learned to do picture stuff.  I've always been afraid that, in an attempt to post a graph showing Vector Group whomping the total return crap out of SPY over 15 years, I would instead grab the photo of Norbert in a Speedo on a topless beach in France, celebrating his 68th birthday.

So, a few words will have to do, instead of that OKE graphic:

      * There are 500+ companies in the S&P 500

      * Of the 500, 360 are rated investment grade

      * Of the 360, 238 are large cap

      * Of the 238, 110 are considered high EPS growth (estimated 9%+ 2019 - 2021)

      * Of the 110, 3 are high yield with considerable dividend stability (4.5%+ current yield, 25 years with no dividend cut)

      * Of the 3, ONLY ONE! has consensus dividend growth projected greater than 9% 2019 - 2021

YUP!  ONEOK (OKE)!!

 

See page 26 for the graphic, not Norbert's photo.       https://ir.oneok.com/~/media/Files/O/OneOK-IR-V2/financial-reports/2020/01-20-us-capital-conference....

 

For those that were paying attention, OKE was involved in a consolidation event about three years ago.  This virtually assured outsized dividend growth for 5-6 years.  Not absolutely guaranteed, of course, but kissing right up next to that.

OKE's dividend has increased 52% over three years and will likely increase 9-11% annually thru 2021.  With today's annualized dividend at $3.74, that means the 2021 dividend will probably be in the neighborhood of $4.50, or about 6.0% on today's price.

OKE has a network of 39,000 miles of natural gas liquids and natural gas pipelines.  The company provides midstream services to producers, processors and customers.  The origin of the company goes back to 1906, an Oklahoma gas company.

As usual, I don't recommend that anyone start clicking a buy button, but for those serious income investors, I suggest taking a look-see at the fundamentals and then exercise patience.  I'd consider the shares somewhat overvalued at this time.

My OKE shares go back 15 years, with a purchase of then Northern Borders.  It has been a terrific income investment.  And the total returns?

     OKE 10-year total return = 19.6%

     OKE 15-year total return = 17.6%

     OKE 20 year total return = 18.7%

I did not get that computed 15-year return because I did not always reinvest all dividends along the way.

 

8 Replies
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Frequent Contributor

Re: For INCOME!! ONEOK, unique among S&P 500

 Thanks for sharing your past winners.

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Frequent Contributor

Re: For INCOME!! ONEOK, unique among S&P 500

Screenshot_2020-02-05 01-20-us-capital-conference pdf.png

 

 

PV link OEK v VFINX since 1985, distributions taken as cash.

 

ElLobo, de la casa de la toro caca grande
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Participant ○

Re: For INCOME!! ONEOK, unique among S&P 500

Just wondering if the tax cost of the "roll up" sale was calculated in the total return. In my case I sold shortly before the transaction, which didn't turn out to be a very good decision based on the most recent price(oh well), and my ending capital acct was -$8969.00 and I sold it for $30,411. As near as I can tell by looking at my tax return I had a cap gain of $12,660 and an ordinary gain of $17,751. So I had zero tax on the $12,660 due my lower income and $3,905 (22%) on the ordinary gain. So for me about 12% total tax. But for a high roller like you (no offense, just an assumption based on your choice of scotch) and others? I had owned these shares since it was NBP in 2006.

0 Kudos
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Explorer ○○

Re: For INCOME!! ONEOK, unique among S&P 500

From the PV output:

OKE   Loss of 75.6%  April 1987 - March 1988, 6 years for price recovery.  There are others over 50% reduction, take a strong stomach to hang in.  Witnessing message board reactions for much lower share value reductions of more vanilla equity holdings through the years I would bet the bail out rate would be very high.  MLPs just a few years ago, etc.  Just sayin'.

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Frequent Contributor

Re: For INCOME!! ONEOK, unique among S&P 500


@MNfish wrote:

Just wondering if the tax cost of the "roll up" sale was calculated in the total return. In my case I sold shortly before the transaction, which didn't turn out to be a very good decision based on the most recent price(oh well), and my ending capital acct was -$8969.00 and I sold it for $30,411. As near as I can tell by looking at my tax return I had a cap gain of $12,660 and an ordinary gain of $17,751. So I had zero tax on the $12,660 due my lower income and $3,905 (22%) on the ordinary gain. So for me about 12% total tax. But for a high roller like you (no offense, just an assumption based on your choice of scotch) and others?


 

 Cliff is too busy composing his next Kudo related post to respond to you.

   Long term, high-income investors have felt the pain of several roll-ups in the energy sector. After spending years exalting the tax benefits of MLPs/etc., it is not a subject you will find him willingly posting about. Total returns after taxes could have been cut in half for some, but those returns are never reflected in the returns we often see posted/marketed.

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Community Manager Community Manager
Community Manager

Re: For INCOME!! ONEOK, unique among S&P 500

 @Bentley you are hereby suspended for 24 hours. This is far from the first time you’ve made comments about Cliff.

I know you’ll say he’s done the same to you in the past, but in this case it appears to me there was no reason for you to make your comment about him. 

I am starting to crack down on repeat offenders because I see the same rivalries playing themselves out ad nauseam. 

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Participant ○○

Re: For INCOME!! ONEOK, unique among S&P 500

 Thank you, Ryan M.  You have made this forum a better place.

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Frequent Contributor

Re: For INCOME!! ONEOK, unique among S&P 500

 


@KathieL wrote:

 Thank you, Ryan M.  You have made this forum a better place.

+1


 

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