This Blue Chip High Dividend Stock Looking For Better Times

Like many of the stocks in our recent articles, this week we're covering a stock from our High Dividend Stocks By Sector Tables, - Seadrill, (SDRL). Seadrill has been lagging the market in 2013, thanks to a weak 4th quarter earnings report, and reduced earnings in 2012. However, analysts are now projecting strong future growth for SDRL, resulting in a very low 5-year PEG. Near term, SDRL looks undervalued on a 2014 PEG basis, and also has a 2013 PEG below the 1.00 threshold.

For tax reasons, SDRL prepaid its March 2013 $.85 dividend in December, which bumped up its 2012 total payout, which would've been $3.66 without that prepayment. Concerning 2013 dividends, SDRL management stated on its recent earnings release, "A regular dividend of at least US$0.85/share should be expected for the first quarter, 2013. Final confirmation of the first quarter dividend will be given in the first quarter earnings release in May 2013, with anticipated distribution in June 2013." Another concern has been the sustainability of SDRL's dividend, due to the upcoming sale of the majority of its Tender rig fleet. However, SDRL is replacing that fleet with ultra-deepwater rigs, which command much higher dayrates, which should help its cash flow in the long run.

Source: Seeking Alpha

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