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Seadrill dividend danger overrated, Morgan Stanley says

  • Speculation over a potential dividend cut has helped send Seadrill (SDRL +2.6%) shares down 20% during the past three months, but Morgan Stanley analysts say there's little reason for so much worry.
  • Although SDRL has sold off as investors hone in on its high leverage and ability to bridge a large funding gap amid near-term industry headwinds, the firm says it is confident in SDRL's ability to bridge the funding gap through asset backed financing while contract backlog continues to provide near-term cash flow visibility.
  • The Stanley analysts see an attractive entry point with SDRL trading at a compelling ~11% yield.
  • Other deepwater drillers also are higher: ESV +1%, ATW +1.3%, RDC +1.2%.
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Comments (24)
  • saratogahawk
    , contributor
    Comments (2037) | Send Message
     
    I got more yesterday at $34.79 and feel good about it.
    19 Feb, 12:21 PM Reply Like
  • drjorde
    , contributor
    Comments (158) | Send Message
     
    It is about time that someone reputable published and article on SDRL.
    19 Feb, 12:25 PM Reply Like
  • user 18159032
    , contributor
    Comments (664) | Send Message
     
    Saratoga, you do have to admire MP's raw courage in making this call at this early date.
    19 Feb, 12:28 PM Reply Like
  • 2839298249
    , contributor
    Comments (303) | Send Message
     
    Finally-an analyst who can think independently.
    19 Feb, 12:34 PM Reply Like
  • swiver
    , contributor
    Comments (42) | Send Message
     
    So, its time to buy again?
    19 Feb, 12:35 PM Reply Like
  • saratogahawk
    , contributor
    Comments (2037) | Send Message
     
    Almost like this was a concerted attack on the entire industry. I think they wanted in and wanted in a lot cheaper. What do you want to bet that the recent naysayers are upgrading in a few months.
    19 Feb, 12:39 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3575) | Send Message
     
    The Wells Fargo analyst will probably upgrade when it's back at $46... ;)
    19 Feb, 01:46 PM Reply Like
  • saratogahawk
    , contributor
    Comments (2037) | Send Message
     
    Matt Conlan and Tom Rhee. You are most certainly right.
    19 Feb, 03:31 PM Reply Like
  • Debutant
    , contributor
    Comments (2265) | Send Message
     
    Same here: I added at $35.36, at $36.21 and at $37.50 during this pullback; am feeling great about it; and am not thinking a minute about the ones who followed the propagandists and missed the boat.
    http://on.barrons.com/...
    19 Feb, 12:40 PM Reply Like
  • 2839298249
    , contributor
    Comments (303) | Send Message
     
    Saratoga-I agree completely. It was an unmitigated assault against the entire industry based on falsehoods. I have been posting for two weeks trying to get one analyst to divulge facts for their siren call that the cycle has turned significantly negative. No response.

     

    SDRL's earnings report could be an explosive catalyst to propel the sector higher.
    19 Feb, 12:43 PM Reply Like
  • divdood
    , contributor
    Comments (10) | Send Message
     
    S'Hawk,
    We were on the same page yesterday...I bought more SDRL at 34.87. Nothing like solid news re: the Pemex deal to trump yet another blah-blah-blah article.
    "ya gotta know when to hold 'em..." sang Kenny Rogers
    19 Feb, 12:44 PM Reply Like
  • financeminister
    , contributor
    Comments (817) | Send Message
     
    aaaaah jealous of you guys. I got in at $40 and if I didn't have to keep my cash to pay taxes, I would have atleast added to my position at 35. Hope I get another oppertunity to buy at $35
    19 Feb, 12:44 PM Reply Like
  • James_B
    , contributor
    Comments (132) | Send Message
     
    Took a position at $36 on Friday the 14th on margin. I have followed this company since 2011, know it pretty well, I like the cash flows (as Power Hedge pointed out yesterday) and the revenue backlog. Basically, double checked the numbers on Thursday of last week and made the decision to buy on margin. I'm feeling pretty good about it so far based on what's come out since this week.
    19 Feb, 01:14 PM Reply Like
  • Elz4107
    , contributor
    Comments (219) | Send Message
     
    Long SDRL, but buying on margin is definitely not appropriate for this stock.
    20 Feb, 06:04 PM Reply Like
  • grox01
    , contributor
    Comments (712) | Send Message
     
    To funny those analysts!
    I guess to have finish their shopping.
    19 Feb, 01:27 PM Reply Like
  • Zeus2012
    , contributor
    Comments (706) | Send Message
     
    You do realize that MS is the lead underwriter for the monetization of MLPs floated by SDRL.
    19 Feb, 02:32 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (4329) | Send Message
     
    Oh, is that what's going on. Great info, thanks.

     

    Now I understand better why a broker who ran a local big-brokerage office said he saw stocks recommendations based on what the legal department said, not their value.

     

    (SDRL) may well be a great buy... just the recommendation is less than meaningful.
    19 Feb, 02:37 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3575) | Send Message
     
    I pay no heed to analysts in either case, although in this case I do happen to agree with him, but I don't get why people follow analysts.
    19 Feb, 08:07 PM Reply Like
  • tennis44
    , contributor
    Comments (58) | Send Message
     
    Sdrl is a great buy at this price,we are loading up for an increase to 42 .the very analysts are buying
    19 Feb, 03:27 PM Reply Like
  • Dick Phillips
    , contributor
    Comments (95) | Send Message
     
    I have been looking at SDRL for some time and yesterday used some cash from re-balancing another holding to start a position at $34.91. But I do have a question that some who have held for awhile can answer- is a foreign tax paid on the dividend if held in a non-tax sheltered account? If so, what percentage is withheld? I guess I should find out next month anyway as I will easily beat the exdiv date.
    19 Feb, 05:45 PM Reply Like
  • AZKID44
    , contributor
    Comments (67) | Send Message
     
    The answer is NO. I've held SDRL for a couple of years and I can tell you there has not been any foreign tax withholdings in my taxable brokerage account. IMHO its a great investment !!!
    19 Feb, 06:02 PM Reply Like
  • Dick Phillips
    , contributor
    Comments (95) | Send Message
     
    Thank you both for that. I know I can recover the taxes paid when I file my next tax return (ABX is one that I have to pay the tax on) but as a small investor I like to use DRIP and any money withheld for taxes reduces the number of shares that will be added. I expect that I will add to my small position and look forward to those dividends.
    20 Feb, 11:20 AM Reply Like
  • NV_GARY
    , contributor
    Comments (2482) | Send Message
     
    Dick P
    Also- no tax worries at at with SDRL- is a Bermuda co- no tax and no need for tax treaty. ESV should be in something like an IRA or ROTHG
    19 Feb, 10:20 PM Reply Like
  • Raybee
    , contributor
    Comments (6) | Send Message
     
    Agree. Finally a reputable firm has made a comment . The bear raid has been unreal and my px tells me that many " bears " want in for the long term at bargain rates of return . Not one of the negative assessments identify what the shipyards that are building new rigs would " have " to do with the pricing of the new ships if Sdrl, and others , would be forced to renogotiate the contracts . Nonsense .
    20 Feb, 04:34 PM Reply Like
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