OKE - This Energy Stock's $18.8 Billion Acquisition Is About to Pay Big Dividends
2023-11-04 07:40:00 ET
Oneok (NYSE: OKE) made a bold move this year, acquiring Magellan Midstream Partners in an $18.8 billion deal. That needle-moving transaction closed right near the end of the third quarter.
Given that timing, the deal didn't boost the company's results in the period, though it didn't need help given the strength of its existing operations. However, the merger will add to the pipeline company's already strong growth profile starting in the fourth quarter. That will give Oneok more fuel to grow its 5.9%-yielding dividend.
Oneok recently reported strong third-quarter results. The midstream giant generated $1 billion of adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA ) during the third quarter, up 11% year over year. Earnings would have been even higher if not for some additional costs associated with the Magellan deal. The company incurred $123 million in transaction-related costs during the quarter while only getting a $40 million contribution from Magellan for the six days it owned the entity in the period.
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This Energy Stock's $18.8 Billion Acquisition Is About to Pay Big Dividends