Seadrill Limited: $3 A Share Dividend

| About: Seadrill Limited (SDRL)

Seadrill Limited, (NYSE:SDRL) an offshore drilling contractor, provides offshore drilling services to the oil and gas industries worldwide. It also offers platform drilling, well intervention, and engineering services. As of March 31, 2011, the company owned and operated 54 offshore drilling units.

Seadrill's latest dividend as of Q3 2011 yields a little over $3 a share, paid out in quarterly installments of 0.76 cents.

Investing in dividend yielding stocks is a smart and safer play if you have the money to afford a good amount of shares.

For example, if you bought 3,000 shares of Seadrill one day before the ex-dividend date of December 8th, 2011, held the shares three business days until settlement, you would have made $2,280 for a four day hold.

In order to receive the dividend, you must buy the stock no later than before the close of the market one business day before the ex-dividend date.

After the close on the day before the ex-dividend date and before the market opens the next day, all open good-until-canceled limit, stop, and stop limit orders have the price of the stock automatically reduced by the amount of the dividend, except for orders that are indicated as, "Do Not Reduce.”

On the ex-dividend date, the stock price is adjusted downward by the amount of the dividend by the exchange on which the stock trades. In Seadrill's case, we divide four quarters into the annual dividend payout of a little over 3$ a share.




per share


cash dividend

per share

Total dividend

per share

in NOK

Ex dividend date

Payable date

3Q 2011



Dec 8, 2011

Dec 21, 2011

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On the date of the next ex-dividend, we can expect a 0.76 cents per share cut out of the stock price of Seadrill.

Depending on market conditions on that date, Seadril could see a greater loss in stock price, a lesser loss, or even a gain in stock price.

Some examples of these market conditions would be:

  • An overall market sell off
  • Oil prices falling
  • Oil prices rising
  • An overall market rally

Notwithstanding the above conditions, we can also expect the pps to rise in the trading session before the ex-dividend date, as many people will simply want to buy Seadrill just to receive the dividend.

This presents an interesting scenario for both long and short day trades the last day prior to the ex-dividend date. You can also choose to use the option chain for hedges and leverage.

If you are a long-term investor who just wants to buy and hold indefinitely, none of what I just said will really matter much to you. Seadrill is a very solid company with solid fundamentals.

Financial Highlights
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Fiscal Year
Fiscal Year Ends: Dec 31
Most Recent Quarter (mrq): Sep 30, 2011
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Profit Margin (ttm): 41.42%
Operating Margin (ttm): 40.94%
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Management Effectiveness
Return on Assets (ttm): 6.34%
Return on Equity (ttm): 31.43%
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Income Statement
Revenue (ttm): 4.30B
Revenue Per Share (ttm): 9.67
Qtrly Revenue Growth (yoy): -3.70%
Gross Profit (ttm): N/A
EBITDA (ttm)6: 2.32B
Net Income Avl to Common (ttm): 1.78B
Diluted EPS (ttm): 3.96
Qtrly Earnings Growth (yoy): -90.00%
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Balance Sheet
Total Cash (mrq): 496.00M
Total Cash Per Share (mrq): 1.06
Total Debt (mrq): 9.86B
Total Debt/Equity (mrq): 145.60
Current Ratio (mrq): 0.77
Book Value Per Share (mrq): 13.79
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Cash Flow Statement
Operating Cash Flow (ttm): 1.76B
Levered Free Cash Flow (ttm): -1.17B
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ROA and ROE are very good. The ROE being good is expected, in large part because of the dividend pay-out.

With nearly 4 to 1 cash to debt ratio, we can expect Seadrill to continue paying out a nice size dividend.

Seadrill is definitely one of the best dividend paying stocks around.

Disclosure: I am long SDRL.