Comparing Offshore Drilling Companies’ Dividend Yields



Dividend yield

Dividend yield indicates how much a company pays in dividends relative to its share price. It’s calculated as the dollar value of dividends as a percentage of the stock price. Income investors generally value high-dividend-yield stocks while growth investors have little interest in dividend stocks.

Another way to look at dividend yields is that we know how much cash flow investors are getting through dividends from each dollar they invest. High-dividend-yield stocks can be a good source of income, but at the same time, high dividends may come at the cost of growth potential. Paying out dividends means a company isn’t reinvesting that money in itself, which may hamper growth prospects.

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Financial pressure on offshore drillers

The brutal downturn that started toward the end of 2014 has put offshore drillers (IYE) under financial pressure. To preserve cash, offshore drillers have either eliminated dividends or cut dividends.

Dividend cut

Seadrill (SDRL) was the first company among offshore drillers to eliminate dividends in November 2014. Transocean (RIG) suspended dividends in January 2015. In January 2016, Rowan Companies (RDC) also eliminated its dividends.

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Ensco (ESV) paid its latest dividend of $0.01 per share in June. For the last nine quarters, Ensco has paid the same dividend per share. Currently, the company’s dividend yield stands at 0.52%.

Seadrill Partners

Seadrill Partners (SDLP) is popular for its high dividend yield. It paid a cash distribution of $0.10 per share, in line with the previous quarter’s distribution. The company has a dividend yield of 10.44%.


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