I had previously mentioned a new energy company that I decided to add to my portfolio, Ensco. I talked a little about the new purchase of ESV shares. I then came across another company named HP, Helmerich & Payne, that just came on my radar due to some large dividend increases. I first spotted it in my monthly CCC rankings for January.
Well I took a look at both companies and have an article coming out next Wed. on thediv-net.com. I've decided for now that ESV offers a better value and decided to double my position this week.
Another fellow blogger picked up more shares and also shared with us some shots from FAST Graphs. You can check out FFDividend's article here.
I purchased another 100 shares @ 55.52/share. I now own 200 shares and ESV has become one of my largest positions. These 100 shares should pay out $300 in annual dividends with the new dividend rate.
I just can't get over the high projected earnings growth (20%), the high initial dividend(5.5%), low debt/assets (.25), relatively new fleet, and diversification.
ESV doesn't come without risks. Oil pricing could put pressure on their services. They specialize in deep and extremely deep rigs. These are some of the most expensive places to drill for oil. So the price of oil has to stay elevated in order for companies to drill these deep wells and be profitable.
As always, I wanted to let me readers know about my recent purchases.
ESV looks really good. Thanks for the mention.
ReplyDeleteFFdividend,
DeleteNo problem. I'm done adding to ESV for a while so my other positions can catch up.
Take care!
AAI,
ReplyDeleteThanks for the info on ESV. I just checked out ESV on the yahoo finance site. It looks like the dividend has really increased from 2010-present. The quarterly payout increased from .025 to .75. Prior to 2010 the payout was unchanged starting from 1997. I'm curious why the dividend didn't increase for over a decade. Was the company undergoing massive expansion during the previous decade?
MDP,
DeleteSure thing. ESV is definitely new to paying rising dividends and also a higher dividend. It's not unusual for a company to pay a smaller dividend while trying to grow rapidly. I think the management team is just listening to the shareholders. This is a quote from the CFO:
"So I'd say, as a management team, we listen very closely to our shareholders. We take on board what's been discussed over the last couple of months and we will be sharing this feedback with our board here before the end of the year. As you know, this is ultimately a board decision as to what we do around return of capital and I'm not, obviously, in any position to give you any projected outcome of those discussions. But I will tell you there will be discussion before the end of the year on the matter. With respect to distributable reserves, I guess, I give you just in very general guidance, right now. We have a little bit less than $0.5 billion of distributable reserves and we expect that to be more than $1 billion by the end of the fourth quarter. And the issue, I think, people have not completely come to grips with is that U.K. companies do have to have distributable reserves in order to pay dividends and execute share repurchase programs. So that is - you're right to ask the question, it's an important element of how much can you pay in dividends and how much stock can you repurchase. And I'd say, we feel like we're in good shape, your distributable reserves basically get created by dividending up earnings from subsidiaries to the holding company which can be a challenging process for a U.K. company. But it gets done in the course of time, and I think we feel like we've got enough flexibility to do whatever we think makes sense going forward."
Thanks for stopping by!
I have owned HP for about 11 years. Stock price is up over 540% and dividend has gone from .0375 to .50 per share.
ReplyDeleteAnonymous,
DeleteWow, congrats to you! That's an incredible return. Let me be clear that HP looks like a very solid company but has had a big run the last year. I think ESV may be at a better value currently. I wouldn't mind picking up some HP though if the price comes down a little.
Thanks for sharing!