Midstream operator OneOK (OKE +0.69%) operates like a toll booth for the energy industry. Through its 60,000 miles of pipelines, it delivers crude oil, carbon dioxide, natural gas, and natural gas liquids (NGLs). Most of its revenue comes directly from fees it charges to use its pipelines. The Tulsa company has long-term contracts that deliver stable earnings.
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The 120-year-old company is scheduled to report fourth-quarter earnings after the market closes today. Analysts are expecting earnings per share (EPS) of $1.50, reflecting a decline of 4% compared to the same period last year. Revenues are forecast to be $8.9 billion, a year-over-year increase of 3%.
Is its share gain sustainable?
OneOK's stock is up around 18% so far this year, part of an overall rise for the energy sector in 2026. The company may also be seeing the payoff from its acquisition spree of the past few years. In 2023, it spent $18.8 billion to buy out competitor Magellan Midstream; in 2024, it plunked down $2.6 billion for Medallion Midstream;and in January 2025, it spent $4.3 billion for EnLink.
NYSE: OKE
Key Data Points
OneOK also increased its dividend by 4% this year, marking the fourth consecutive year of dividend increases. The dividend yield is well above average at around 4.9% at its current share price. OneOK has pledged to grow revenue by 3% to 4% each year while maintaining a dividend payout ratio of 85% or lower.
That may seem high, even for a midstream company with predictable revenue streams. But that is misleading because the payout ratio normally takes net income into account. OneOK has significant physical assets with high noncash depreciation charges that artificially lower reported earnings.
A better metric of dividend safety for OneOK would be how many times its cash flow from operations covers its dividend. Over the first nine months of 2025, the company generated $4.1 billion in cash flow and paid out $1.94 billion in dividends, a ratio slightly better than 2:1.
Through the first nine months, OneOK reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.9 billion, up 27.4% year over year. It also had EPS of $3.87, up 8% over the same period a year ago.
No need to wait for the earnings report
Though analysts predict lower EPS for OneOK in the fourth quarter, it may make sense to buy the stock now, even if there isn't a positive earnings surprise. The current situation between the U.S. and Iran in the Persian Gulf is already pushing oil prices higher.
Even though OneOK doesn't produce oil, it benefits from higher oil prices because it owns the pipes that capture the "associated" gas and NGLs produced from those oil wells. Higher oil prices lead to more drilling, thereby increasing utilization rates of ONEOK's pipelines.
On top of that, OneOK appears to be a solid long-term stock, with an above-average dividend, trading at around 16 times earnings. At its current price, it trades at a discount relative to many of its midstream competitors.
