The Best Dividend Growers, Part 18: Schlumberger

Jun. 2.14 | About: Schlumberger Limited (SLB)

Summary

For each S&P 500 industry sector, I will be taking a look at available companies to help determine the best stocks for income investors.

In determining the best stocks per industry, I will be examining both the dividend growth and dividend yields of the stocks.

Out of this group of Oil & Gas Equipment Services stocks, I feel that Schlumberger is the best long-term option for income investors currently.

Overview

In this series of articles, I will be identifying which S&P 500 stocks for various S&P industries are best suitable for income investors, based on dividend growth and yield. For Part 18, I will be taking a look at Oil & Gas Equipment & Services stocks. These stocks include:

  • Baker Hughes (NYSE:BHI)
  • Cameron International (NYSE:CAM)
  • FMC Technologies (NYSE:FTI)
  • Halliburton (NYSE:HAL)
  • National Oilwell Varco (NYSE:NOV)
  • Schlumberger (NYSE:SLB)

The following stocks currently do not pay a dividend: Cameron International and FMC Technologies.

When ranking the dividend paying stocks by yield, the order is as follows:

  • National Oilwell Varco - 2.25%
  • Schlumberger - 1.54%
  • Baker Hughes - 0.96%
  • Halliburton - 0.93%

When ranking them by dividend growth over the past five years, the order is as follows:

  • Schlumberger - 90.48%
  • Halliburton - 66.67%
  • Baker Hughes - 13.33%
  • National Oilwell Varco - (54.0%)

Based strictly on dividend yield and growth, none of the stocks look very appealing, although Schlumberger is probably the most attractive, with the 2nd highest yield and best dividend growth over the past five years. National Oilwell Varco has the best yield, but has seen a decline in its dividend in the past five years. And the growth of Halliburton and Baker Hughes is not great enough to make their yields under 1% very appealing.

Looking at the chart below, you can see that Baker Hughes has the best revenue growth over the past five years, with Schlumberger having the second best.

NOV Revenue (<a href=

NOV Revenue (TTM) data by YCharts

In terms of earnings, Halliburton has seen the best growth over the past five years, with Schlumberger once again seeing the second best growth over the same period.

NOV EPS Basic Chart

NOV EPS Basic (TTM) data by YCharts

Based on trailing PE ratio, National Oilwell Varco has the lowest value, with Schlumberger yet again placing 2nd out of the four stocks.

NOV PE Ratio Chart

NOV PE Ratio (TTM) data by YCharts

In terms of payout ratio, all of the companies have stable payout ratios ranging from 17% to 24%.

NOV Payout Ratio Chart

NOV Payout Ratio (TTM) data by YCharts

Conclusion

Schlumberger has seen significant revenue and earnings growth over the past five years. This looks to continue as the company reported double digit year-over-year increases in both revenue and earnings in its latest quarterly report.

The company has seen the highest dividend growth over the last five years (and last ten years as well), maintains the second highest dividend yield, a fair price based on historical PE ratio, and a low payout ratio. I feel that it is the best long-term option out of this group of stocks for income investors.

National Oilwell Varco has the highest yield, but the company has also seen the lowest revenue growth over the past five years along with negative growth in its dividend. Halliburton is a solid option, but I feel that currently it is slightly overpriced, plus based on "income", its dividend hasn't been able to compete with Schlumberger's over the past several years. As always, I suggest individual investors perform their own research before making any investment decisions.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.