ONEOK, Inc. (NYSE:OKE)
CAPS Rating:
An energy company that purchases, transports, stores and distributes natural gas.
Think Outside the Street
An energy company that purchases, transports, stores and distributes natural gas.
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Rated five stars by Standard & Poors. Invested through Computershare in direct stock purchase plan. First purchase in April at $26.02 and NO TRANSACTION fees. Trading now in the range of $39-$40. Keeping it for the dividend - while it's only yielding 4.2% at today's price my yield on cost is considerably higher. With its expansion projects it's probably still a good buy even at today's price, though.
You must be kidding. I STILL have the top bull pitch for this? Wow. Well, let's have another look at this great little dividend payer and grower. I no longer own it in real life. I doubled my money with this one, and I have to wonder just how often that happens, at least in such a short time, with any utility.
I didn't double my money in CAPS. But in real life, making my first purchase in April of 2009 at $26.02 - well, just look at where the price is now!
But this is a review of just what it's done since I made it a CAPS pick. And why in the world would I un-select it? This is one pick that will always have a big positive score far into the future!
I just wish I'd made it a CAPS pick at the time I bought it in real life. Oh well.
So - what's OKE done for me as a CAPS pick? Glad you asked...
My actual original start price for OKE was $39.58.
My listed start price is now $37.20. Dividends have hacked $2.38, or just a hair over 6% (6.01%) off my original start price. The share price has gone up, for sure. But I have no control over that.
But the ever-shrinking start price? While I don't have direct control over it, this IS what dividend investing does in CAPS. That ever-shrinking start price is the result of using dividend investing as my strategy in CAPS.
Dividend investing is my strategy in real life, too. Think of that constantly downward sloping start price trajectory as your real-life dividend-adjusted price - because that's what it is.
And wow. OKE has been fantastic.
CAPS, as I've pointed out in many pitches I've gone on to update, assumes dividends are reinvested at the ex-dividend day opening price.
So when they adjust your start price downward with each dividend payout every time it goes ex-dividend, they calculate a 'reduction factor', like so...
1 / 1 plus (amount of dividend/ex-dividend day opening price)
This is multiplied by your then-current start price to calculate a new start price, every time one of your picks goes ex-dividend.
Here's OKE's dividend ex-dates, ex-dividend date opening price, the amount of the dividend, and the effect on my start price since 11/23/2009:
....X-Div Date................Dividend.................X-Div Opening Price...............Listed Start Price
Beginning price, 11/23/2009.............................................................................$39.58
....1/27/2010....................$0.44...............................$44.69................................$39.19
....4/28/2010....................$0.44...............................$48.56................................$38.84
....7/28/2010....................$0.46...............................$47.25................................$38.47
..10/27/2010....................$0.48...............................$49.50................................$38.10
....1/27/2011....................$0.52...............................$58.67.................................$37.76
....4/27/2011....................$0.52...............................$68.34.................................$37.48
....7/28/2011....................$0.56...............................$73.53.................................$37.20
That start price will just keep right on sinking, folks. That's a GOOD thing! And that also represents what my true cost of shares would actually be if I had bought shares on my start date, and reinvested dividends ever since....for each share I bought on 11/23/2009, held, and reinvested dividends, today, 8/23/2011, I would now have 1.063978 shares.
Let's see...1.063978 times $37.20....=....my actual original start price of $39.58!
Pretty cool, huh?
So tell me...why...should I ever close this pick? Whatever the current price does...my listed start price will, as long as those dividends keep coming (and they will), remain headed firmly in only ONE direction...D-O-W-N!!!
What was I thinking when I made the above comment and hit "Post" without pointing out that PHENOMENAL dividend growth? Look again at that table I constructed above! WOW!
What would my yield on cost be, incidentally, just assuming I bought at my original start price of $39.58 on 11/23/2009? 5.66%.
I should have kept this one, but oh well, I needed the money at the time. Poor me....
After all...at my REAL LIFE original buy-in price of $26.02 a share in April 2009, my yield on original cost would now be...8.61%!
You know, I should have just...STOPPED...before going on to figure that out.
8.61% safe, secure, dividend. Aww, man....OUCH!
Oh well...what can you do? I needed the money.
Bye-bye $37's!
In 5 days OKE goes ex-div again (Nov 3rd, 2011) and my start price will leave the $37's and start working its way down through the $36's. The dividend will likely be raised again before the Feb ex-div date. This company has not gone over 2 quarters without a dividend increase since I made it a CAPS pick. My start price will likely drop to around $36.93 give or take a few cents.
Well, here it is Feb 4th. OKE went ex-dividend on Jan 27th, and bumped their dividend up yet again...the quarterly payout is now $0.61. That's up 8.9% from the previous quarterly payout of $0.56. They seem to make their main purpose in life lining shareholders' pockets with ever-increasing payouts.
On another note, anyone notice this company is only rated 3 stars by CAPS?
That...is the very definition of stupid.
Continuing my table.....
....X-Div Date................Dividend.................X-Div Opening Price...............Listed Start Price
.....11/03/2011..................$0.56.........................$75.83.....................................$36.93
......1/27/2012..................$0.61.........................$87.50.....................................$36.67
Is 38.6% dividend growth since November of 2009 OK? The dividend was $0.44/quarter then...now the dividend is $0.61/quarter.
If I still had the shares I paid $26.62 for in April 2009, my yield on cost would now be...9.16%. I wish I hadn't needed the money and had to sell them. Oh well.
Since I made OKE a CAPS pick in November of 2009, dividends have shaved $2.91 off my original start price, dropping it by 7.35%.
The payout ratio is now 69%. With a PE of 26.87 and a forward PE of 22.02 (Yahoo!Finance).
Yeah...3 stars...what a bunch of geniuses.