Recent Buy

buyAs I was discussing recently when revealing that I added to my position in Apple Inc. (AAPL), June has been a really crazy and abnormal month in regards to capital deployment.

However, as mentioned, that AAPL purchase was fully funded by the cash that was part of the acquisition of Lorillard Inc. by Reynolds American, Inc. (RAI).

I decided to spread that capital out across a few different plays because, frankly, I see various and diversified opportunities in both the market and my portfolio across a number of different industries and companies. The AAPL position was small, and I felt it was appropriate to double that.

The stock I’ll be discussing below is a bit different. I actually wasn’t all that displeased with the size of the position nor was I particularly anxious to buy more shares. In addition, I’m overexposed to the sector it’s in. However, sometimes Mr. Market becomes particularly depressed about a certain company’s future prospects and wants to sell for a ridiculously low price. And, well, I’m generally a buyer more often than not when that happens.

I purchased 20 shares of ONEOK, Inc. (OKE) on 6/15/15 for $39.46 per share.

Overview

ONEOK, Inc. is a diversified energy company. It is the sole general partner and, as of March 31, 2015, 37.6 percent owner of ONEOK Partners L.P. (OKS). OKS is a leader in the gathering, processing, transportation, and storage of natural gas. It also owns and operates a large natural gas liquids system, connecting NGL supply in the Mid-Continent and Rocky Mountain regions with key market centers.

OKS is a midstream master limited partnership. OKE, on the other hand, operates as normal corporation. Its a pure-play general partner, whose purpose is to own the GP and limited partner units in OKS. Its growth is highly tied to OKS’s growth.

The MLP owns and operates more than 18,000 miles of natural gas gathering pipelines and 6,600 miles of transmission pipeline. They also own and operate 19 active processing plants. For NGLs, they own and operate more than 7,000 miles of NGL gathering pipelines, more than 4,000 miles of distribution pipeline, seven fractionators, and eight NGL product terminals.

Reduced Dividend Growth Guidance

I last picked up shares in OKE back in December 2014, at $44.56 per share. At the time, the company was guiding for dividend growth of 14% in 2015 and 12% to 15% dividend growth looking out over the foreseeable future. Obviously, this is incredible growth when you factor in what’s already a very high and attractive starting yield.

Well, that guidance has since been reduced:

2015 revised guidance now includes a projected 4 percent to 8 percent increase in ONEOK’s dividends declared compared with 2014, subject to ONEOK board approval, compared with its previous guidance of a 14 percent increase.

Due to lower commodity prices, reduced producer drilling and the anticipated impact to natural gas volume growth, ONEOK Partners is suspending capital expenditures for the following announced capital-growth projects:

  • The Demicks Lake natural gas processing plant and related infrastructure in the Williston Basin in North Dakota;
  • The Knox natural gas processing plant and related infrastructure in the Mid-Continent region in Oklahoma; and
  • The Bronco natural gas processing plant and related infrastructure in the Powder River Basin in Wyoming.

“ONEOK Partners expects to resume suspended capital-growth projects and update associated completion dates as soon as market conditions improve,” said Spencer. “The planning and development the partnership has already completed puts it in a position to quickly resume these projects when the environment improves and its customers require these services.”

It’s important, however, to keep perspective here.

First, we’re still looking at 4% dividend growth on the low end, if guidance holds true. So far, that guidance looks good with the recent reaffirmation when OKE released Q1 2015 results. If every stock in my portfolio could produce the 6.13% yield that OKE does and still deliver 4% dividend growth, I’d be elated. The company’s dividend for Q1 2015 was 2.5% higher than the payout for Q4 2014 and 51.3% higher than Q1 2014. So a lot of dividend growth has really already been front-loaded here.

Second, the stock is down almost 20% YTD and about 41% over the last year. Is that warranted? Is OKE worth more than $2 billion less in June than it was in January? Is the company worth some $6 billion less YOY?

I happen to think not. Cash flow available for dividends was $152.1 million in Q1 2015, compared to $211.4 million in Q1 2014. That’s a drop of 28% on the face of it, but Q1 2014’s results included $82.8 million in cash flow from the former energy services segment. So we have a drop in YOY cash flow for dividends that isn’t even close to the slide in the stock’s price over the last year, while one also has to really question whether or not the current commodity pricing situation is set to last forever.

Risks

There are a number of risks to consider here with OKE, and I consider it a rather aggressive investment from a standpoint of risk and reward.

Primarily, the MLP structure could come under pressure if there are any material changes at the federal government level insofar as taxation. Though highly unlikely, it’s a risk that, if it were to occur, could have a substantial effect on the business (and others like it).

Rising interest rates is also a risk due to the amount of debt that OKE and OKS carry.

Although OKE is somewhat insulated from major swings in commodity prices, they are exposed through their processing business. In addition, lower natural gas prices can reduce demand for transportation and new growth projects.

One other potential risk is a dividend cut as, like a lot of other MLPs, the dividend coverage is pretty tight. As of Q1 2015, cash flow for dividends covered the dividend 1.2 times over. That’s in line with OKE’s long-term target of 1.0 to 1.1.

Finally, I view black swan events as a risk, such as a fire or other disaster at one of their pipelines or plants.

Valuation

Net income isn’t an accurate picture of cash flow for a MLP or its GP, so the P/E ratio isn’t a viable valuation metric.

I valued shares using a dividend discount model analysis with an 8% discount rate and a 4% long-term dividend growth rate. That growth rate is lower than the 6% I used last time, to account for reduced guidance. I happen to think that’s an incredibly conservative growth rate when looking out over the long term. However, I also used a lower discount rate to account for the time value of money. The DDM analysis gives me a fair value of $62.92.

Overall, I think the stock is very attractively valued here, relative to both its current potential and long-term potential. The more than 36,000 miles of pipelines the firm controls are incredible assets and almost impossible to replicate for a new competitor. When/if commodity prices bounce back and the company’s growth projects are back online, its cash flow could increase rather significantly, meaning the margin of safety right now is rather sizable. Even if commodity pricing stays low for a sustained period of time, the dividend is covered and the low end of guidance still provides for very attractive total income prospects and dividend growth potential, as well as a severely undervalued stock.

Conclusion

This is the lowest price I’ve been able to land OKE at. And I’m very excited about that. I thought the stock was cheap in the mid-$40s, so I think it’s an incredible opportunity here below $40.

I’ve long been too heavily allocated to energy, so I wasn’t in a rush to buy OKE. But I think the valuation, yield, and quality all combine to offer a rather compelling investment thesis right now. As I discussed before, the fundamentals are solid, the company enjoys massive competitive advantages, and their track record is excellent.

One potential possibility is that OKE follows in the footsteps of some peers and consolidates with OKS. That could provide for additional clarity, less complexity, a pop in the stock’s price, as well as an immediate boost to the dividend.

But this is one of those rare stocks where you can land a yield that’s about three times that of the broader market along with dividend growth well over the rate of inflation.

I used a free trade in my Scottrade account for this purchase. While it was a smaller transaction than normal, I paid no commission fee.

This purchase adds $48.40 to my annual dividend income, based on the current $0.6050 quarterly dividend.

I’m going to include current valuation opinions from other analysts below, which I use to concentrate my reasonable valuation estimate:

Morningstar rates OKE as a 4/5 star valuation, with a fair value estimate of $52.00.

S&P Capital IQ rates OKE as a 3/5 star “hold”, with a fair value calculation of $31.60.

I’ll update my Freedom Fund in early July to reflect this recent purchase.

Full Disclosure: Long AAPL, RAI, and OKE.

What do you think of OKE here? Like the valuation after the drop? Think it’s a good opportunity? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Note: Affiliate link included. 

Similar Posts

64 Comments

  1. Interesting buy. Im rather fond of the oil/energy moving/processing companies as well, pipelines etc. And with the lowered stock valuations from the fall of oil have been picking up some good companies on the cheaper side of their 52week avg. Considering doing so again in the near future with my next buy unless the Greek turmoil brings some good opportunities in financial stocks. Happy to see you get so much dividend income for your buck!

  2. I am holding some OKE but don’t want to add more here. But I am hoping for market to drop tomorrow. I am taking off from work tomorrow so I can put full attention to buy. I just finished making my buying plan for tomorrow and click on your site to see whats in your mind and I see another buy for you in June. You are going full speed in June, same here.

    I am planning to load up on UNP tomorrow and some other purchases.

  3. Wow..those purchases just keep coming. Great work Jason. I have OKE on my watchlist too, but I need to do some more research before I can make up my mind.

    Thanks for sharing
    R2R

  4. What’s not to like about 6+% yield indeed! Only thing witholding me is overexposure to the energy sector. Do you have a maximum percentage of exposure to the energy sector in mind for your portfolio?

  5. DW,

    Got plenty of dividend income for my buck on this one. 🙂

    Trying to mix it up in terms of yield, growth, industry, risk, etc. I wasn’t particularly interested in OKE (or energy in general) due to my exposure, but the big slide since about mid-April changed my mind. The stock seems to be worth at least $50, in my view. Potentially much higher.

    Thanks for stopping by!

    Cheers.

  6. Dividend Mantra,

    Nice buy here. People are still going to need natural gas to heat and/or cool there homes and industries and buildings will still rely on natural gas for heat, cool and power where applicable.

    It is always great to take advantage of sales and allow your money to work harder for you.

  7. AJ,

    Taking a day off work? That’s strong, my friend. I hope it works out for us. My cash pile is low after June’s run, but I could fit in another buy or two over the next couple days if I absolutely had to. That would just mean there’s little left for July. Looks like Greece is probably going to be exiting the eurozone here, but we’ll see. If the market needs a catalyst for a pullback, this appears to be as good as any.

    Looking forward to seeing how it goes!

    Best regards.

  8. IP,

    Yeah, I still have reservations about the energy industry looking out over, say, 20 years. But I don’t think demand for OKE’s services is going away any time real soon. And it’s not like you can build those pipelines over night. Only room for so many players, and OKE is one of the larger.

    Happy to put those dollars to work so that they can fight the good fight. 🙂

    Hope all is well over there!

    Cheers.

  9. Good job putting that RAI money to work DM. It allowed me to make 3 purchases this month which is amazing for me. Looking forward to that extra KRFT special dividend as well once the merger is finalized. 🙂

  10. Captain,

    It appears a lot of us were particularly busy in June. Awesome to see it!

    Have fun with that special dividend over there. 2015 is turning out to be another spectacular year. 🙂

    Best regards.

  11. Mantra,

    Whoa whoa whoa — how much deployment do you have going out in June? Mantra, this is awesome – do you think this is your biggest month of ammo going out into the field? This is great, huge addition.

    -Lanny

  12. Hey Jason,

    Congrats on moooore purchases, haha. 6%+ yield is really nice. You bought a great income-generating asset. Keep up the great work and the sharing dude.

    Best regards
    DB

  13. I’m trying to refrain from buying more energy, but these prices are calling me. NOV is something I’d like to average down on AGAIN, but I know I really shouldn’t. Thank God for the drop in HSY’s price, as well as the drop in the railroad companies’ prices. It gives me something to buy at a great price that isn’t energy. Now I’m just wondering if I should average down on NSC or initiate a position in UNP. So many choices. I wish I could buy them all.

    This was certainly a purchase I didn’t expect from you since I know you (like me and most dividend growth investors) are overweight in energy. But hey, why not, right? If you got the cash and OKE is at the right price, why not buy? I’d buy it if I didn’t have so many other companies ahead of it that I want to buy. And like I said, I’m trying to shy away from energy right now. I’m looking to invest in HSY, NSC/UNP, and HCP the next chance I get.

    I hope we’ll be seeing eBook income reports soon. I look forward to that.

    Sincerely,
    ARB–Angry Retail Banker

  14. Lanny,

    It’s been a really busy month. I invested about $5,200 before the $2,500 I received from the LO acquisition. So that’s a lot of cash to put out there. I doubt I’ll be that busy in July, but anything is possible. Just doing my best to stay busy and keep at it! 🙂

    Thanks for all the support. Let’s keep it rolling, bud.

    Best wishes.

  15. DB,

    Thanks! 🙂

    June 2015 will go down as one of those great months. The dividend income keeps on piling up, and that’s what’s buying me my freedom.

    Appreciate you stopping by. Hope your month is also closing out strong.

    Cheers.

  16. FV,

    I hear you there. I think I’m pretty much fully stocked up on MLP exposure after this one, if I wasn’t already. Gotta manage the risk.

    Take care!

  17. ARB,

    Yeah, I wasn’t particularly interested in OKE or any other energy plays (and I’m still not). But OKE is still a somewhat smallish position for the portfolio and the yield/value was incredibly compelling after a continued fall. I thought $44 was already a really strong price. Below $40 (after a dividend raise) was just that much better. Couldn’t pass up a few more shares here. 🙂

    Looking forward to sharing some details on the book. Hope to put out a “book report” at some point here soon!

    Thanks for all the support. Good luck and have fun over there picking out the right stock(s).

    Best regards.

  18. Ive had OKE on my list fir further research for far too long. Ive been trying to shy away from adding to energy but recently added to my XOM position. Wasnt really trying to add there for much the same reason as you. I think I still need to add another pipeline company to my portfolio though and OKE looks pretty good. I’ve got enough cash for maybe a couple more purchases but after that I’ll probably have to sell some of my employers shares to redistribute into DGI companies. Hopefully this post will push me to fully analyze the company. Have a great week.

  19. JC,

    You’re in a great spot over there in regards to being able to sell off the ESOP stock to fund new purchases. That’s awesome! 🙂

    Definitely take a look. OKE isn’t for everyone, and I think the risk is rather high. But so are the potential long-term rewards. We’ll see.

    Hope all is well.

    Best regards.

  20. I know what you mean! My REITs are down a bit now, and Suncor is down a lot as well, so they make for tempting targets for a buy and major average down. Then again, with the news of no Greece deal over the weekend Financials might take a hit as well, so lots of potential opportunities coming up!

    All the best!

  21. Another great buy Jason…WOW! you are having one heck of a month over there. This month might go down as a record setting month in terms of overall stock purchases, or at the very least buy transactions. 🙂

    Way to continue to add to that passive income stream my friend. Keep it up! AFFJ

  22. Way to go Jason! I do not know much about MLP’s can you please tell me how they work in taxable accounts regarding special rules or tax issues. Thank you and I look forward to your future posts.

  23. AFFJ,

    June’s definitely going to be a new watershed for me. I wish every month was like this, but I’ll gladly take it just occasionally as well. 🙂

    Appreciate all the support. Looks like a lot of us have been quite busy in June. Love to see so many people that much closer to freedom.

    Cheers!

  24. Brazo,

    Thanks so much. Doing my best to continue inspiring and adding value. 🙂

    As far as MLPs go, this is a great primer:

    http://www.investopedia.com/articles/basics/07/ml_partnerships.asp

    That said, OKE is the general partner. So the dividend is qualified, and is taxed just like that of any other C corporation (like Coca-Cola, for instance). OKS, on the other hand, would face the tax implications as described in that article I just linked. So make sure you always do your due diligence and know exactly what you’re investing in.

    Hope that helps!

    Take care.

  25. Jason,
    6 % dividendyield + 4-8 % growth sounds very nice.
    I’m not very familiar with the sector of gas pipelines.
    How many years it will be gas in these basins to carry that gas through the piepelines?

    I always use the numbers of Morningstar.
    Morningstar says FCF per share for 2014-12 is -3.42 USD. Since 2012 negative!
    http://financials.morningstar.com/ratios/r.html?t=OKE
    Isn’t that a problem for you?

    Ahoj,
    ZaVodou

  26. What’s the minimum value you’ll buy in one transaction? I try to only do trades over £2000 as anything else the fees eat up a larger proportion of my investment. Would love to hear your thoughts on this.

  27. Jason I have been itching to pull the trigger on OKE, and frankly I’m not sure why. I think I may reconsider. With such an attractive price and dividend growth over the years it seems to be a no-brainier here! I look forward to being a fellow shareholder in such an amazing company!

    Cheers!
    Steven

  28. Hi Jason, I like the buying down to reduce your cost basics. the additional shares from OKE dividend should be quite nice addition to the freedom fund. I like that you are maintaining a diversified portfolio, and that’s not too over weighted in any one sector or stock. Good job on this. also congrats on the book royalty. I am almost done with the book. I would have had finished your book yesterday.But I went to the DEF LEPPARD concert with my wife, and it was great. Keep up the good work. Cheers

  29. Jason,

    Sweet move. The Market is all over the place right now. I agree with your comments that it is not worth $6bil less YOY. Way to take advantage of the marketplace and its short sightedness. What a month it has been for you!

    – Gremlin

  30. Wow!! You already made 8 purchases this month. You are very busy in rolling the snow ball faster and faster.

    I was wondering what is your estimated annual dividend income right now? In my guess, it must be more than $7000 right now..

    Keep it up!

    Cheers,

  31. That helped very much. Thank you again for you work, I will keep coming back for a long time.

  32. Great pickup! I’ve added to my OKE position recently as well. I think it’ll continue to gush dividends for a long time, assuming it’s not acquired.

  33. ZaVodou,

    The large formations that OKE (and other major pipeline companies) are working with and transporting energy away from tend to last quite a while. And then there will very likely be new discoveries down the road. And keep in mind as well that these pipelines aren’t transporting energy just from shale plays and what not. Pipelines have been around for more than 100 years now. I don’t think their importance is going to radically shift anytime particularly soon.

    As far as FCF goes, MLPs are a lot like REITs in that it’s difficult to gauge profitability based on typical numbers you’d use for C corporations. And that’s because of their corporate structure. I noted that in the analysis I performed on OKE back in December. Morningstar follows and values OKE, and values it over $50. I noted that in the article. If you’re interested, Morningstar actually put together a short piece on using DCF to value MLPs:

    http://www.morningstar.com/cover/videocenter.aspx?id=670742

    Hope that helps!

    Cheers.

  34. hayley,

    I try to limit commission fees during the accumulation period to 0.5% or less. So if you’re paying, say, $7 in commission fees, I’d try to make sure transactions are, on average, at least $1,400.

    This transaction didn’t include any commission fees, as I noted in the article, which is why it was rather small for me.

    Take care!

  35. Steven,

    Definitely take a look. It’s not for everyone due to the risks, but I think it’s a really solid holding for a diversified portfolio. Their track record is excellent, and I don’t see pipelines going anywhere anytime soon. The current yield is almost twice that of the five-year average. Don’t run into that very often.

    Best regards.

  36. Michael,

    Hey, if there’s any good reason to put the book down, it’s a Def Leppard concert! 🙂

    Appreciate the support very much. Hope you enjoy the rest of it. Doing my best to inspire and create outstanding content.

    Best wishes.

  37. Gremlin,

    When Mr. Market is depressed, I’m elated! 🙂

    Hoping to continue rolling the snowball rather aggressively into July and beyond. I’m giving it 100% right now.

    Hope you’re having a great month over there as well.

    Cheers!

  38. FJ,

    It was a really, really busy month. I’m so fortunate. Six purchases with new capital (and reinvested dividends) and then three purchases with the capital from the LO acquisition. I don’t think I’ll hit that 10th buy, though. That would be something.

    It looks like my forward dividend income is over $7,000 now. Crossed that mark not that long ago. It’ll be tough to hit $7,200 this year, but I’m doing all I can to stay busy through the summer to positively affect that result. As long as I see value and quality, I’m buying.

    Congrats on hitting the six-figure net worth mark recently! Keep it up. I imagine hitting the second $100k will be even easier and faster. 🙂

    Best regards.

  39. soggy,

    As long as they continue to pipe rather sizable and growing dividend income into my brokerage account, I’ll be a very happy shareholder. 🙂

    Glad to be on the same page here. The current yield is about twice that of the five-year average. We’ll see how it goes, but I’m pretty excited.

    Cheers!

  40. I feel you on the over exposure to the energy sector. I want to pull the trigger on more, but am hesitant given my exposure to MLPs and the majors. Keep up the good work!

  41. Hi Jason.
    It seems that the problems in Greece, will be the perfect excuse for the market to correct.
    Do you know what the pay-out of Oneok? I’ve looked but I have not very clear.
    A greeting.

  42. DD,

    I’m with you on that one. I’m aware that the portfolio’s current size is only a fraction of what it will eventually be, meaning that weights and exposure will dramatically change over time. But I’m also careful about managing the risk along the way.

    Thanks for dropping by!

    Best regards.

  43. Awesome buy dude! I have been waiting around for the greek stuff to play out and it has begun…so started buying in today and will continue to do so as the contagion (hopefully) spreads. Going foreign with NSRGY, BBL…also picked up some CSCO & UNP. Just the start as we see how July plays out…

  44. Miguel,

    Yeah, I received an email from someone stating that the market was going to drop at least 5% today. Just can’t time that stuff. I honestly don’t think about the broader stock market’s movements for even one second on any day, unless I’m writing an article about it (which is rare). A total waste of my time.

    As far as the payout ratio for ONEOK, I listed that in the article:

    “As of Q1 2015, cash flow for dividends covered the dividend 1.2 times over. That’s in line with OKE’s long-term target of 1.0 to 1.1.”

    Let’s do hope that many individual stocks are even cheaper over the coming months, though. I need my money to go as far as possible. 🙂

    Stay in touch!

    Cheers.

  45. dzogen,

    I certainly hope this is the start of something much greater. Not exactly a correction, or even close. But we’ll see. I had a few emails from people stating that they were expecting fireworks. It’s a rather ordinary day. But I’m going to have some cash to work with over the coming days, so I’m obviously hoping for stocks like UNP, WPC, and TRV to drop even more. 🙂

    Take care!

  46. Sam,

    KMI is much larger. Greater scale there through their superior pipeline network. I have greater exposure to KMI because I believe it’s a lower-risk stock (relative to some other pipeline plays) that still offers tremendous income and growth.

    If I had to pick just one to own, it would be KMI. But if I had room for both and I were picking between the two right now, I would pick OKE due to the more attractive valuation and much higher yield.

    Cheers!

  47. I knew there would be another buy before June was up. Once you get the momentum going of investing and picking up new shares it’s hard to stop. While I have no energy play in my portfolio yet OKE does look like an interesting play in the “safer” pipeline sector and with that current yield it does look compelling. Thank you for sharing your recent buy and can’t wait to see what July will look like for you.

  48. Day off was worth. I been buying from 11:30 to 4PM. I purchased in order UNP, NSC, WPC, EMR, XOM, CVX (can’t pass CVX @ 96.60 @ end of the day).

  49. DH,

    Got one more article coming out later today. 🙂

    Love the momentum. Once you get that snowball rolling, passive income begets more passive income. Success begets success. The more dividend income you have, the more you want. So on and so forth.

    Let’s keep it rolling!

    Best regards.

  50. AJ,

    I honestly wasn’t that impressed. But I guess that’s the state of the market when people are taking days off from work to take advantage of a measly 2% drop. I certainly hope that wasn’t it. I’d be highly surprised if we don’t see a 5% or 10% drop at some point in the near future. But because I don’t have a crystal ball, I just keep on buying and building that passive income. 🙂

    Great stock buys, by the way. I continue to like the railroads quite a bit here. If the market repeats this tomorrow, I might just squeak in one more buy this month.

    Cheers!

  51. PIM,

    Yeah, I was actually disappointed with today. I kept hearing about what a disaster would be and then we get… a 2% drop? That’s really no fun at all. And many of the stocks I’m looking to bulk up on (UNP, TRV, WPC, etc.) didn’t even really move by that much. But, who knows? Maybe we’ll see another 5% fall here over the coming days. Bring it on! 🙂

    Cheers.

  52. I pulled the trigger this morning @ $39.04. Here’s to hoping they don’t stop growing that healthy sized dividend!

  53. Steven,

    Nice. Glad to be a fellow shareholder!

    I don’t anticipate them doing that. But keep in mind that a lot of the dividend growth is front-loaded here. Even if they only grow it at a 3% or 4% rate over the next year or two, the long-term average is fantastic (especially when we’re talking about a 6% yield to start with). And, eventually, prices will bounce back and they’ll be back to the growth projects.

    Cheers.

  54. Yes definitely a good starting point at 6%! I picked up 16 shares today and plan on increasing that to 50 by the end of July if the price is right. I ended up putting right at $4200 to work in June at an average of 4.31% (thanks to the nice boost from OKE and OHI). Looks like June was a productive month all around for many in the DGI community, and hopefully July is as good if not better! I can’t wait for dividends from these purchases give my tiny snowball a good shove! Thanks for everything you do!

  55. I like this buy and I don’t think it is very risky. Pipelines are needed to supply resources. I think of it as a railroad for natural gas delivery. Quick question, why did you buy OKE over OKS? OKS yield is 9.5%. Is this for tax reasons? I guess my real question is would you have chosen to purchase OKS if your money was in a Roth or IRA? Regardless, nice buy Jason.

  56. DD,

    Indeed. The pipelines are a very cost-efficient way to move certain resources, especially from certain points to other certain points. And OKE has great locations.

    As far as why OKE over OKS, I’ve addressed that a few times now in prior posts. I prefer the GP due to the higher growth and easier tax structure. Generally speaking, the GP should produce far better growth and returns over a long period of time due to the IDRs. And you see that play out here if you compare OKE and OKS over the last decade.

    I’ve heard it both ways in regards to MLPs in IRAs. That’s a complicated matter, but I would have bought OKE no matter the account. I just think it’s the preferable long-term investment.

    Cheers!

  57. I agree, this is a good investment. I just grabbed some shares today on the dip and sold a put for next month in case the price drops more. Thanks.

Leave a Reply