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We have maintained our Neutral recommendation on utility provider ONEOK Inc. (OKE - Analyst Report). The company currently has a Zacks Rank #3 (Hold).

Why the Reiteration?

Despite missing the Zacks Consensus Estimate for earnings per share and revenues, ONEOK Inc.’s higher natural gas volumes, collected and processed and natural gas liquids (NGL) volumes gathered in the Williston Basin enabled it to surpass the year-ago level.

It is evident from past record that ONEOK Inc. maintains a strong financial position which enables it to pursue both organic and inorganic growth. In addition, steady cash flow generation from the company’s operating segments gives ONEOK Inc. more investment options.

In 2013, the company intends to invest $3 billion, including an allocation of $2.64 billion for its subsidiary ONEOK Partners LP (OKS - Analyst Report). As ONEOK Partners acts as a primary growth vehicle for ONEOK Inc., the company invariably deploys a major chunk of capital for this arm.

In Apr 2013, ONEOK Partners completed three important projects - Bakken NGL pipeline, Stateline II plant and an ethane header pipeline. We believe that continuous investment in the Bakken Shale and its neighboring locations will play a crucial role in meeting the ever increasing demand for fossil fuel. These initiatives will likely improve ONEOK Inc.’s future results.

In addition, a solid financial position allows ONEOK Inc. to maximize shareholder wealth through dividend payments at regular intervals. The company paid $73.8 million as dividends during the first three months of 2013. Further, ONEOK Inc. announced that it will increase the quarterly dividend rate by 2 cents in Jul 2013 from the current rate of 36 cents per share, subject to its board’s approval.

However, stringent regulations and volatile commodity pricing could weigh on the company’s forthcoming performance.

Other Stocks to Consider

Other stocks in the industry that are worth considering now include Atmos Energy Corp. (ATO - Snapshot Report) and New Jersey Resources Corp. (NJR - Snapshot Report), both with a Zacks Rank #2 (Buy).

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