Hook and thesis
Oneok (OKE) has been punished along with the rest of the midstream complex. The stock sits in the low-to-mid $70s after trading above $100 within the past year, and that gap creates an opportunity: the business is generating healthy operating cash flow while sustaining a 4x-per-year dividend that now runs about $1.03 per quarter. I think OKE's combination of yield (roughly 5.5% based on mid-$70s price), steady operating cash flow and targeted growth investments makes it a better trade for investors who want yield plus upside than simply buying the safer, slower-growth banner of Kinder Morgan.
My actionable view: take a long position in OKE on weakness between $72 and $76, place a protective stop near $62 and scale out into $86 and $100 targets. Time horizon - 3 to 12 months (swing to short-term position) depending on catalysts and commodity-driven flows.
What Oneok does and why the market should care
Oneok is a diversified midstream operator focused on natural gas gathering, processing, storage and transportation plus natural gas liquids (NGL) transportation and fractionation. The company services production and refining hubs in the midcontinent, the Permian and the Rocky Mountain regions. The business model is infrastructure-heavy and fee-oriented, but it retains exposure to commodity-driven volumes and NGL spreads — which creates variability but also optional upside when volumes and demand rise.
Why investors should care now: recent financials show the company is producing meaningful operating cash flow while investing at a measured pace and returning a large chunk of that cash to shareholders via a growing dividend. That combination supports a high current yield and a balance between income stability and capital appreciation if volumes or spreads recover.
Data-backed fundamentals
- Operating cash flow: Recent quarterly results show net cash flow from operating activities of $1.525B in Q2 2025 and $0.904B in Q1 2025. Adding the prior two quarters with reported operating cash flow (Q3 2024 at $1.251B and Q2 2024 at $1.430B) gives an approximate trailing 12-month operating cash flow run-rate around $5.11B.
- Investing and implied FCF: Investing cash flows across those same quarters totaled about -$2.76B (Q2 2025 -$814M, Q1 2025 -$694M, Q3 2024 -$498M, Q2 2024 -$756M). That implies free cash flow on the order of roughly $2.35B over the last 12 months — ample coverage for the dividend and modest debt reduction.
- Profitability: Q2 2025 revenues were $7.887B with operating income of $1.431B and net income attributable to the parent of $841M. Earnings per diluted share in the quarter were about $1.34.
- Balance sheet and leverage: Total assets stood at $64.524B with long-term debt of $31.3B and equity of $21.904B as of the most recent quarter-end. Debt is a meaningful part of the capital structure, but operating cash flow is large relative to recent capex outlays.
- Dividend yield and growth: Oneok has been paying $1.03 per share quarterly through 2025 (most recent declarations on 07/16/2025 and 10/15/2025). That annualizes to $4.12 per share. At a market price in the $74 area, the forward-ish yield is roughly 5.6%.
Valuation framing
I do not have a live market-cap print in the file used for this write-up, but the equity price has moved from 12-month highs near $108-110 down into the mid-$70s range. The stock is therefore trading substantially below its recent highs, leaving room for mean reversion if cash flow and distribution stability remain intact.
Qualitatively, Oneok is a classic midstream valuation story: a high-yielding infrastructure operator where the multiple investors are willing to pay depends on (1) confidence in distributable cash flow, (2) balance-sheet progress and (3) the outlook for volumes/NGL spreads. Given the reported ~ $5.1B annualized operating cash flow and implied FCF of roughly $2.35B, the name looks attractive on a cash-flow yield basis versus its own recent trading range. If the market re-rates the dividend reliability and growth optionality, the path to prior multiples near the $100 level becomes plausible.
Catalysts that can re-rate the stock
- Dividend traction and potential raise - continued $1.03 quarterly payments were declared through late 2025; a demonstration of sustainable payouts or an incremental raise would reduce yield-risk and re-attract income buyers.
- Volume and spread improvement driven by winter nat-gas demand, LNG export ramp or Permian takeaway tightening - any visible uptick in throughput or NGL spreads would boost fee-based and commodity-related earnings.
- Execution on growth projects or accretive M&A - visible project completion and incremental fee-based contracts can lift forward FCF guidance.
- Debt reduction and improved leverage metrics - reducing long-term debt from the reported $31.3B or improving interest coverage would materially reduce perceived risk premium.
Actionable trade idea (entry, stop, targets)
Trade direction: Long (income + upside). Risk profile: Medium. Time horizon: 3-12 months (swing / short-term position).
Entry zone: $72 - $76 per share (buy on weakness within this range).
Initial position size: 2-4% of portfolio for conservative allocation; larger if you are income-focused and can tolerate midstream cyclicality.
Protective stop: $62 (about 15% below $73).
Primary target: $86 (near-term resistance and recovery toward low double-digit percent gains).
Stretch target: $100 (retest toward prior trading range highs; ~35% from mid-$74s).
Sell / re-evaluate at $62 stop or if dividend coverage materially deteriorates.Rationale: the entry allows a cushion below the mid-$70s price that has already absorbed a significant multiple compression. The stop is sized to limit downside if volumes or distributable cash flow deteriorate. Targets are calibrated to the stock's prior $100+ trading range and an intermediate resistance around the mid-$80s seen repeatedly over the trailing year.
Risks and counterarguments
- Commodity and volume risk: A prolonged decline in natural gas volumes or NGL demand would directly hit cash flow. If winter demand is weak and LNG exports stall, the earnings and FCF profile can compress quickly.
- Interest rate and refinancing risk: With long-term debt around $31.3B, higher funding costs or a tougher refinancing environment would pressure interest expense and leverage. That can shrink distributable cash and impair the dividend runway.
- Operational/incident risk: Pipelines and processing facilities carry the possibility of outages, accidents, or regulatory stoppages that can reduce throughput and increase costs.
- Dividend vulnerability: Even with good coverage historically, management can cut distributions if cash flow weakens, which would likely trigger a further sell-off given the stock's high yield profile.
- Macro/regulatory risk: Policy changes around energy infrastructure permitting or unfavorable tax/regulatory shifts could raise costs or slow project execution.
Counterargument: If you are a pure capital-preservation investor, Kinder Morgan-style stability may be preferable. Kinder Morgan and similar names are often positioned as lower-volatility midstream exposures; such investors may accept a lower yield for steadier unit-growth and a lower perceived execution risk. For that cohort, Oneok's more aggressive growth and higher leverage present uncomfortable variance.
What would change my mind
I'll downgrade the trade if I see any of the following: (1) a dividend cut or credible guidance from management that payouts are at risk; (2) a material and sustained fall in operating cash flow below the implied ~$5.1B annualized run-rate without commensurate capex reduction; (3) a step-up in net debt beyond the $31B range without clear path to reduction; or (4) major project execution problems that materially increase capex and delay returns.
Conclusion - clear stance
Oneok offers a high-income entry with upside optionality: ~5.6% yield based on recent dividends and mid-$70s prices, large operating cash flow (roughly $5.1B annualized from recent quarters) and modest investing needs that imply multi-hundred-million-dollar free cash flow. For investors willing to tolerate midstream cyclicality and leverage, OKE is a tactical long against the current indecisive market backdrop. The entry zone of $72-$76 gives reasonable downside protection with a stop at $62 and upside targets at $86 and $100.
If natural gas fundamentals firm, dividends remain intact and debt metrics improve, OKE should re-rate toward its prior range. If those things fail to materialize, limit exposure and respect the stop.
Disclosure: This is a trade idea, not personal financial advice. Do your own diligence and size positions to your risk tolerance.