Seadrill dividend danger overrated, Morgan Stanley says

|About: Seadrill Limited (SDRL)|By:, SA News Editor

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%.