Nov. 7, 2011, 5:00 a.m. EST
How to play big oil and get a 9% dividend
By Jeff Reeves
High-yield dividend stocks are the focus of many investors right now — and with good reason. As the market makes dramatic moves up and down but fails to make much headway across the longer term, a steady stream of income via reliable dividends is quite attractive.
Big Oil stocks provide a lot of dividend potential — with Exxon Mobil offering a yield of almost 2.4%, Conoco with a dividend yield of 3.7% and BP plc yielding about 3.8% right now. However, all of these stocks are more or less flat year-to-date in 2011. Although inflationary trends indeed indicate a rise in oil prices, the soft demand of the global economic downturn means these stocks are pretty much treading water despite throwing off big dividends.
But what if you could play oil prices while tripling your dividend to 9%? Wouldn't that be a better way to bank on inflation in oil prices? Even if it takes another 12 months for oil stocks to build a significant rally, in this environment, a 9% return on your investment is pretty darn good!
That's exactly what SeaDrill offers. SeaDrill is an offshore drilling contractor serving the oil and gas industries worldwide, specializing in harsh arctic environments and deepwater conditions. The company owns the manpower and ships to tap wells, then turns those wells over to big energy companies. It's a lucrative business, and SDRL offers a big chunk of its revenue back to shareholders in the form of big dividends.
How big? Last quarter, SDRL shares paid back 75 cents apiece. Annualized to $3 per year (75 times four quarters) and based on current valuations around $33 per share, that's a whopping 9% dividend yield!
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If you want to play the oil surge and get paid big dividends, your typical stocks like Exxon and Chevron aren't bad. But for a more aggressive play that could deliver two or three times the returns, try SeaDrill.
The full article: http://www.marketwatch.com/story/how-to-play-big-oil-and-get-a-9-dividend-2011-11-07
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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