2 deepwater drilling stocks for income investors seeking dividends

2 deepwater drilling stocks for income investors seeking dividends

Research  these Stocks on Kapitall’s Playground Now

research now

Income investors looking for dividends should check out these deepwater drilling stocks. 

After trading sharply lower for the last few months, deepwater drillers are starting to come back. Transocean Ltd. (RIG) kicked off a renaissance in the sector when the company reported respectable quarterly results. Given stocks in this sector pay a healthy dividend yield, it is worthwhile for income investors to look at Transocean again.

Transocean beats expectations

Transocean lowered its costs during the first quarter. Fleet utilization was much higher than the market expected. Revenue efficiency soared to 95.7 percent, which is the highest Transocean achieved since early 2008. In the Ultra deep water segment, revenue efficiency rose to 96.4 percent, up from 90 percent. Investors familiar with the sector might also look at SeaDrill (SDRL). SeaDrill aims to increase production in the ultra deep water. This is one of many reasons why SeaDrill may pay a double-digit dividend yield.

Improving balance sheet

Transocean aims to lower its long-term debt to below $9 billion. While debt maturities are minimal in 2014, the firm plans to also retire $1 billion in debt ahead of schedule.


Transocean spooked investors at its quarterly conference call after suggesting day rates in the deepwater market would be between $365,000 and $400,000. Despite the low rate, Transocean investors will vote for approval of the proposed $3 per share dividend. This gives shares a dividend yielding 7.2 percent. Conversely, SeaDrill’s shares yield around 11 percent.

Firms in this sector require stable natural gas and oil prices to meet 2015 expectations.

Accumulate shares

Investors are likely to approve the higher dividend for Transocean. This should set a floor on its shares. Liabilities from the Macondo spill in the Gulf of Mexico could create uncertainties in the short term. This could create an entry point for income investors. SeaDrill’s volatility is also expected to continue. Like shares of Transocean, drops in SeaDrill’s shares are attractive for investors who want to build a position on dividend-paying stocks.

Disclosure: Author has a long position in SeaDrill.

Written by Chris Lau

Click on the interactive chart to view data over time. 


1. Transocean Ltd. (RIG, Earnings, Analysts, Financials): Provides offshore contract drilling services for oil and gas wells worldwide. Market cap at $15.81B, most recent closing price at $43.92.



2. SeaDrill Limited (SDRL, Earnings, Analysts, Financials): Provides offshore drilling services to the oil and gas industries worldwide. Market cap at $17.67B, most recent closing price at $37.68.



Analyze These Ideas: Getting Started

Dig Deeper: Access Company Snapshots, Charts, Filings


© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC – a FINRA/SIPC member.


5 responses to “2 deepwater drilling stocks for income investors seeking dividends”

  1. nice says:

    It can be safe to convey you are getting stalled by simply old Bundy/mechanical occasion card tickers along with paper timesheets? Is guide book administration of your time and participation so that it is hard to arrange your financing? In case that of course.mobilebell.org

  2. nice says:

    It truly is safe to mention that you'll be getting stalled by means of old Bundy/mechanical time period card tickers in addition to paper timesheets? Is information administration of your energy and participation turning it into hard to ready your money? In the presentation that without a doubt.freemobileplan.org

  3. nice says:

    It is actually safe to speak about you happen to be getting stalled by just old Bundy/mechanical point in time card tickers together with paper timesheets? Is regular administration of your time and participation making it feel like hard to prep your pay for? In the case that you bet.mobilecollections.org

  4. nice says:

    It will be safe to imply you will be getting stalled as a result of old Bundy/mechanical precious time card tickers and even paper timesheets? Is guidebook administration of your energy and participation allowing it to be hard to put together your loan? In the event that absolutely yes.lowcostmobile.org

  5. Thank you for sharing valuable information.

Leave a Reply

Your email address will not be published. Required fields are marked *

  • See Most Recent Articles