5 Energy Stocks For Dividend Growth Junkies

Includes: E, ESV, HP, PBR, PTEN, RIG
by: Stock Croc

Energy stocks have traditionally been attractive because they pay dividends. Depending on the company, these dividend payouts can be essential to equity portfolios for long-term investors. The price of oil continues to be around $100 a barrel, and drillers expect earnings to increase in 2012. We take a look at five energy dividend stocks related to the oil and gas drilling industry to determine how they are faring in light of the complex and risky nature of the business.

Petroleo Brasileiro (NYSE:PBR) Shares are trading around $28.36 at the time of this article's writing. This was 36.61% above the 52-week low of $20.76 that was set on Oct. 4, 2011. The 52-week range was $20.76 to $42.75. Its market cap is $184.9 billion and earnings per share for last year were $3.52 billion. The company paid a dividend of $1.24, yielding 4.38%. Doing business as a key oil and gas driller in Rio de Janeiro, Brazil, Petroleo Brasileiro's price to earning ratio is 8.1. That is slightly undemanding compared to its competitors, which include Eni S.p.A. (NYSE:E). Eni has a market cap of $75 billion, and a price to earnings ratio of 9.6. While Petroleo Brasileiro's shares are trading around $28.36, Eni Spa's share is trading at $42.14. Its operating margin of 20.49% is higher than Eni S.p.A.'s operating margin of 15.49%. The company supplies much of its products to Brazil, which has large and growing oil and gas reserves. The company's market position supports it being a buy.

Helmerich & Payne (NYSE:HP) Shares are trading around $6.90, against their 52-week trading range of $35.58 to $73.40. At the current market price, the company is capitalized at $6.2 billion. It paid a dividend of $0.28, yielding .40% last year. Its operating margin is 27.26% and its market cap is $4.2 billion. One of its direct competitors is Nabors Industries Ltd. (NYSE:NBR), whose operating margin is 10.41%, with a market cap of $5.01 billion. The company has added new rigs to its fleet, which led to it forecasting a 5% sequential increase in revenue days in the first quarter for its U.S. land operations, according to Reuters. Revenues from its rigs for its U.S. land operations make up more than 80% of its total sales. The company announced the death of its chairman, Walter Helmerich III, in January. (The company's likely continued growth due to the addition of rigs makes its shares a buy for dividend investors.

Patterson-UTI Energy (NASDAQ:PTEN) Shares are trading at $19.09, against their 52-week trading range of $15.06 and $34.09. Earnings per share for the last year were $1.84, and it paid a dividend of $.20, yielding 1.05%. The company has cautioned that there are several factors, including its average number of drilling rigs, which can impact its operating results. It plans to continue providing monthly updates on drilling rigs operations. At its current market price, the company is capitalized at $2.95 billion. In comparison to one of its closest competitors, Nabors Industries Ltd. , the company's operating margins are somewhat stronger. Nabors' operating margin is 10.41%, while the company's margins are 20.38%. The company's margins are also stronger than the industry's 19.58%, making it a buy.

Transocean (NYSE:RIG): Shares are trading at $40.31. Transocean's 52-week trading range was $38.21 to $85.98. The company is capitalized at $12.89 billion. Its earnings per share were negative 1.80. It paid a dividend of $3.16 and a strong yield of 8%. Its price per earnings was negative 22.4. The company's revenues have grown consistently each quarter. Transocean has benefited from private and government-owned companies turning to it to meet their drilling needs. In fact, the company built its reputation on taking on the riskier offshore drilling jobs. Potential problems to be considered include Brazil seeking an indictment of Transocean for its role in an oil spill there in 2011. Transocean has maintained that it had no role in the spill, according to CNBC. While the company was consistently profitable last decade, the Macondo spill put a blemish on its record of profits. Depending on the investor's appetite for risk, the company is a buy considering its 8% dividends.

Ensco, plc (NYSE:ESV) shares are trading around $47.55 at the time of writing, against their 52-week trading range of $37.39 to $60.31. At the current market price, the company is capitalized at $10.96 billion. Its earnings per share during the last year were $2.92, and it paid a dividend of $1.40 and a yield of 3%. Its market cap is comparable to that of Transocean, which is the largest oil and gas driller in the world. Its market cap is $12.89 billion. While Transocean's net income fell $548 million last year, Ensco's rose $494.2 million. Like other oil and gas drillers, the company should benefit from being permitted to drilling the Gulf of Mexico. Federal regulators had restricted drilling following the Macondo oil spill. Given its performance, Ensco is a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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