Thursday, June 5, 2014

Recent Buy – Seadrill Limited (SDRL)

I added 15 shares of SDRL on 6/04/14 at $39.46 per share.

  • I really wanted to buy more shares here with SDRL, however I had to get my brakes fixed on my car. The $200 I thought I was going to spend on repairs ended up being $290 due to my Cadillac Deville requiring higher performance brake pads and rotors. This put a damper on how much money I could invest this week. I was only able to invest $591.95 into SDRL. I could have waited another two weeks to get another pay check from my 3rd shift job; however I would have missed out on the dividend payout for SDRL. Therefore I decided to just use whatever funds I already had saved.  Let’s take a look at why I chose SDRL for this month.
  • SDRL managed to recently increase its dividend after posting first-quarter earnings. They already had a very high dividend, and currently have the highest in its peer group. SDRL was able to post a huge $6.54 in earnings per share. Why did they do so well this last quarter? Well for one, they sold some of their assets which include the West Auriga. This sale boosted their operating profit by $316 million. So in reality if they would have not sold the West Auriga, they would have represented a decline year over year.
  • SDRL signed a huge deal with in Mexico with Pemex for up to six jack-up rigs. This is a good signal for investors like me because I can expect SDRL to keep finding good deals with their impressive new rigs. SDRL is a very profitable company with a P/E of 7. They are the best way to play for growth in Arctic demand and overall offshore growth due to the company’s ability to position assets for the big contract deals. Although SDRL has accumulated more debt from the previous year, this is because they have upgraded their fleet in order to make future profits. Don’t be surprised if the price keeps going up here for SDRL. I’m sure they will receive a correction at some point, but that is expected with their dividend yield being so high. They have to dish out $1.8 Billion just for the dividend payout. This is a very risky pick for my portfolio; however I believe I am getting a good deal in the market right now with SDRL. I will update my portfolio in order to keep up with my progress. So do you think SDRL was a good buy at these prices?


  1. Hi DM
    Nice purchase! SDRL is also on my watch list.

  2. DHawk,
    Thank you very much. I had them on my wach list for a few months and finally pulled the trigger on a few shares. Keep in mimd the dividend payout date is right around the corner. And at a payout of $1.00 per share, my only regret is not being able to buy more shares!

  3. DM,

    I like the risk reward with SDRL. Some shy away from the high yielders, but I definitely think there is a place for them in a dividend portfolio. I have been accumulating shares of ESV during the past couple of months. SDRL is worth a second look.

    Best of luck to you.


    1. MDP,
      Thanks for stopping in to read my blog. I couldn't agree with you more. There higher the risk, the greater the reward. In the upcoming months I will be adding safer dividend stocks, but I am aiming for a > 3% dividend yield. I think SDRL is on the right track to growth, but they may have to stop increasing dividends at some point. ESV looks fairly valued in this market. Good luck on your investments!

  4. DM - I recently purchased one of their competitors (ESV) and considered also buying into SDRL. Although SDRL is still on my watch list, just seeing the recent run up in price have made a little trigger shy. :)

    Best Wishes. AFFJ

    1. AFFJ,
      I am hoping SDRL continues to have a run up. ESV also looks like a good buy in this market. I cant wait to collect on the 10.5% dividend. That way I can reinvest it into other great value stocks. Thanks!