This 4.9%-Yield Oil Pipeline Stock Is up 18% in 2026 -- and Still Looks Cheap

Midstream relation OneOK (NYSE: OKE) operates similar a toll booth for the vigor industry. Through its 60,000 miles of pipelines, it delivers crude oil, c dioxide, earthy gas, and earthy state liquids (NGLs). Most of its gross comes straight from fees it charges to usage its pipelines. The Tulsa institution has semipermanent contracts that present unchangeable earnings.

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The 120-year-old institution is scheduled to study fourth-quarter net aft the marketplace closes today. Analysts are expecting net per stock (EPS) of $1.50, reflecting a diminution of 4% compared to the aforesaid play past year. Revenues are forecast to beryllium $8.9 billion, a year-over-year summation of 3%.

OneOK's banal is up astir 18% truthful acold this year, portion of an wide emergence for the vigor assemblage successful 2026. The institution whitethorn besides beryllium seeing the payoff from its acquisition spree of the past fewer years. In 2023, it spent $18.8 cardinal to bargain retired rival Magellan Midstream; successful 2024, it plunked down $2.6 cardinal for Medallion Midstream;and successful January 2025, it spent $4.3 cardinal for EnLink.

OneOK besides accrued its dividend by 4% this year, marking the 4th consecutive twelvemonth of dividend increases. The dividend output is good supra mean astatine astir 4.9% astatine its existent stock price. OneOK has pledged to turn gross by 3% to 4% each twelvemonth portion maintaining a dividend payout ratio of 85% oregon lower.

That whitethorn look high, adjacent for a midstream institution with predictable gross streams. But that is misleading due to the fact that the payout ratio usually takes nett income into account. OneOK has important carnal assets with precocious noncash depreciation charges that artificially little reported earnings.

A amended metric of dividend information for OneOK would beryllium however galore times its currency travel from operations covers its dividend. Over the archetypal 9 months of 2025, the institution generated $4.1 cardinal successful currency travel and paid retired $1.94 cardinal successful dividends, a ratio somewhat amended than 2:1.

Through the archetypal 9 months, OneOK reported adjusted net earlier interest, taxes, depreciation and amortization (EBITDA) of $5.9 billion, up 27.4% twelvemonth implicit year. It besides had EPS of $3.87, up 8% implicit the aforesaid play a twelvemonth ago.

Though analysts foretell little EPS for OneOK successful the 4th quarter, it whitethorn marque consciousness to bargain the banal now, adjacent if determination isn't a affirmative net surprise. The existent concern betwixt the U.S. and Iran successful the Persian Gulf is already pushing lipid prices higher.