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Why ONEOK's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of natural gas company ONEOK (NYSE: OKE  ) jumped 21% today after announcing a spin-off.

So what: The company is spinning off its natural gas distribution business in an effort to build more focused companies. Investors will maintain their shares in ONEOK and get a stake in the new company through a stock dividend. The exact dividend distribution has not yet been determined and management expects to close the deal in the first quarter of next year.  

Now what: The move is expected to allow ONEOK to pay a higher payout after the deal is complete, which may attract dividend investors. This is essentially a move to unlock value in the stock, which has traded to a discount to rivals. This doesn't change the fundamental investment thesis but, for investors looking into either the pipeline or the utility side, it gives the option for a focused investment instead of the diverse company ONEOK had become.  

Record natural gas production is revolutionizing the United States' energy position. Finding the right stocks with upside across the country is key for investors looking for exposure. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza". Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

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Related Tickers

9/29/2016 4:01 PM
OKE $50.94 Down -0.30 -0.59%
ONEOK CAPS Rating: *****