ONEOK Inc

ONEOK has signed an agreement to supply natural gas to a 1-gigawatt power plant serving data centers, marking its first such deal in the AI power market. The project carries a total capital cost of $100 million, which is small relative to the company's $2.7 billion to $3.2 billion capital expenditure guidance for this year. COO Sheridan Swords said the project has a very nice return and that the company is in late stages of discussions with a couple of other opportunities to supply AI data centers. ONEOK's net income jumped 13% in the second quarter, and it raised its full-year net income forecast to $3.6 billion at the midpoint. The company currently yields more than 4.5% and has growth projects scheduled to enter commercial service through the first half of 2029.

NextEra Energy and Oneok are emerging as key beneficiaries of surging electricity demand from AI data centers, with both offering dividend growth. NextEra Energy, the largest publicly traded electric utility by market cap at over $178 billion, operates Florida Power & Light and the clean-energy developer NextEra Energy Resources, and its proposed $67 billion all-stock merger with Dominion Energy would create the world's largest regulated utility serving more than 10 million customers, expected to close in the second half of 2027 pending regulatory approvals. The company has raised its quarterly dividend for 31 consecutive years, most recently by 10%, yielding around 2.8%. Midstream operator Oneok, with over 60,000 miles of pipelines, recently secured a 1-gigawatt natural gas supply agreement for data centers and is engaged with more than 40 counterparties on similar projects, while its fee-based contracts provide cash-flow stability. Oneok pays a dividend yielding roughly 4.8%, has increased it for three straight years, and has not cut its dividend since 1989.

All 12 S&P 500 energy companies that reported earnings this week beat Wall Street's EPS estimates, while nine topped revenue expectations and three missed. Occidental Petroleum posted EPS of $2.40, beating by $0.55, and revenue of $8.33 billion, exceeding forecasts by $1.08 billion. ConocoPhillips reported EPS of $3.24, a $0.30 beat, on revenue of $19.52 billion that missed estimates. Devon Energy delivered EPS of $1.57, beating by $0.16, with revenue of $7.42 billion surpassing expectations by $1.49 billion. ONEOK's EPS of $1.53 beat by $0.13 on revenue of $12.05 billion, a $3.10 billion beat, prompting raised full-year 2026 guidance. Phillips 66 posted EPS of $9.41, a $1.91 beat, on revenue of $52.04 billion, exceeding estimates by $8.00 billion. EOG Resources reported EPS of $5.07, beating by $0.10, with revenue of $8.62 billion topping expectations by $821.75 million. The sector's strong cash flows, disciplined spending, and shareholder returns continued to support performance, with the State Street Energy Select Sector SPDR ETF gaining 28.27% year-to-date, outpacing the broader S&P 500's 12.63% return.

ONEOK raised its full-year 2026 net income guidance to a range of $3.41 billion to $3.79 billion, with an earnings per share midpoint of $5.68, while also filing for a $1.00 billion at-the-market common stock offering. The company reported second-quarter 2026 revenue of $12.05 billion and net income of $966 million, alongside higher earnings per share. The upgraded guidance reflects stronger throughput trends and ongoing infrastructure projects, while the new equity program adds financing flexibility but introduces potential dilution. Investors are weighing the raised outlook against balance sheet strain and integration risks from recent acquisitions.

A slate of major companies including Palantir Technologies, Vertex Pharmaceuticals, and Diamondback Energy are set to report quarterly earnings after the market closes on August 3, 2026. Palantir is expected to post earnings per share of $0.28, a 115.38% jump from the same quarter last year, while Vertex's consensus stands at $4.30, up 7.50%. Diamondback Energy's forecast of $6.08 per share represents a 127.72% surge, though it missed estimates in the fourth quarter of 2025. Other notable reports include ONEOK with a consensus of $1.39, ON Semiconductor at $0.72, and SBA Communications at $2.76, which would mark a 12.93% decline year-over-year. Sterling Infrastructure is projected to deliver $5.00 per share, a 96.08% increase, and Jazz Pharmaceuticals is expected to swing to $5.06 per share after a large miss in the prior-year quarter.

Three U.S.-listed midstream operators are delivering rising dividends and distributions as natural gas demand and project backlogs grow. ONEOK, a C-corp, raised its quarterly dividend 4% to $1.07 per share in January, with 2026 adjusted EBITDA guided to $7.9 billion to $8.3 billion and $475 million in cumulative synergies from the EnLink and Medallion acquisitions through the third quarter of 2025. Kinder Morgan, also a C-corp, reported first-quarter 2026 earnings per share of 48 cents, beating the 39-cent consensus, while free cash flow surged 73% and its project backlog reached $10.1 billion, with 92% tied to natural gas. MPLX, a master limited partnership that issues a Schedule K-1, offers a trailing distribution yield of 7.61% and reaffirmed 12.5% annual distribution growth through 2027, backed by a $2.4 billion organic growth capital expenditure program targeting the Permian and Marcellus basins.

ONEOK stock may be undervalued after management raised 2026 earnings guidance, with its current price-to-earnings ratio of about 16.0 times sitting below a tailored fair P/E estimate of roughly 21.0 times. The shares recently closed at US$89.92 and have returned 122.3% over five years, yet the market is pricing ONEOK at a discount to closer peers that average 19.5 times earnings, though above the broader oil and gas sector average of 13.4 times. The valuation debate hinges on whether the company can deliver on expansion projects and volume growth without eroding returns, with a bull case suggesting the stock is 6% undervalued and a bear case pointing to 7% overvaluation. Overall, ONEOK screens as modestly undervalued on earnings multiples, but mixed broader checks indicate it is not a clear bargain.

Jim Cramer told a Mad Money caller that the 5% T-bill trade is over, with 6-month bills now yielding about 4%, and argued that quality dividend growers like Enbridge and Oneok offer better long-term returns. Enbridge yields roughly 6.9% and just delivered its 31st consecutive annual dividend increase, while Oneok yields about 4.7% and raised its payout 4% in February 2026. Cramer noted that $10,000 in a 6% dividend grower earns roughly $600 annually versus about $199 from a 4% T-bill, and that over five years Enbridge returned 85% and Oneok returned 102%, not counting reinvested dividends. He stressed that the choice depends on time horizon: T-bills suit money needed within a year, but for five years or longer, dividend growers have historically outperformed despite price swings.

The U.S. and Iran agreed to halt hostilities after a weekend of military exchanges, with both sides reportedly meeting in Qatar this week to pursue a permanent peace deal. Iran had attacked commercial ships in the Strait of Hormuz, prompting U.S. retaliatory strikes on Iranian targets. Oil prices rose modestly, with WTI regaining $70 a barrel and Brent approaching $75. The skirmishes have slowed traffic through the Strait, though Saudi Arabia resumed crude loadings at Ras Tanura for the first time in four months. Analysts note that continued uncertainty could keep oil prices elevated, benefiting companies like Chevron, which expects significant free cash flow at current price levels, and pipeline stocks like Oneok, which offers stable fee-based earnings and a 4.8% dividend yield.

ONEOK is the better energy stock to buy in 2026 compared to New Fortress Energy, which is undergoing a major restructuring. New Fortress Energy reported a net loss of nearly $1.8 billion and negative free cash flow of $1.49 billion in fiscal 2025, while ONEOK posted net income of nearly $3.4 billion and free cash flow of nearly $2.5 billion. New Fortress Energy is pursuing a U.K. restructuring that would cut its debt by $5.1 billion to $528 million but dilute existing shareholders to about 35% of the new entity, with the deal expected to close by the third quarter. ONEOK benefits from long-term fee-based contracts, rising demand from AI data centers and LNG exports, and is projected to generate about $38.6 billion in revenue and $3.6 billion in net income in fiscal 2026. While New Fortress Energy trades at a much lower price-to-sales ratio of 0.1 times versus ONEOK’s 1.6 times, that discount reflects its significant financial distress and restructuring risks.