What happened

Shares of ONEOK (NYSE:OKE) rebounded 11.6% in October, according to data provided by S&P Global Market Intelligence. Fueling the pipeline stock was an analyst upgrade, a reaffirmed dividend, and surprisingly solid third-quarter results.  

So what

Wells Fargo upgraded shares of ONEOK from equal weight to overweight early last month while increasing its price target from $34 to $36 a share. Fueling the bank's more bullish view on the company was its "increasingly positive" outlook for ethane and a recovery in North Dakota's Bakken shale. Those catalysts could help drive stronger results for the pipeline company in the coming quarters.

A twist of pipelines with a bright sun shining through.

Image source: Getty Images.

Meanwhile, despite all the turbulence in the energy market this year, ONEOK has held firm on its dividend. It declared its latest payment last month, which was in line with the prior one. At the current level, ONEOK yields an eye-popping 12.8%.

Finally, the company reported strong third-quarter results as its earnings and cash flow jumped by double digits, compared to the year-ago period. Overall, it generated more than $540 million in cash, up 12.5% year over year, which was enough to cover its high-yielding dividend by 1.3 times.

That solid showing has the company on track to achieve the midpoint of its revised guidance range, which would see earnings rise 8.5% year over year. Combine that with the expected decline in capital spending due to the recent completion of its remaining growth projects, and ONEOK believes it can maintain its big-time payout. 

Now what

ONEOK's earnings bounced back sharply last quarter as oil companies restarted idled wells faster than expected. With market conditions improving, which some analysts believe will continue, the risk of a dividend reduction has diminished. That makes ONEOK an interesting stock for income investors to consider adding to their watchlists.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.