Three of the five highest-yielding S&P 500 stocks are oil and gas related companies, according to results from GuruFocus’ All-In-One-Screener.
The screener can be used to sort stocks with more than 150 filters. To find S&P 500 companies with high dividend yields, I selected Yes in the “In the S&P 500” field on the Fundamental tab. Then I sorted the resulting list by clicking the Yield” column to sort from highest to lowest.
Transocean Ltd (RIG, Financial)
Topping the list of highest-yielding S&P 500 stocks is Transocean, a Swiss company that provides offshore contract drilling services for oil and gas wells. The company’s yield is 12.5% and the payout ratio is 48%; the stock currently trades at $19.15 with a forward P/E ratio of 212.77 and P/S ratio of 0.8.
The stock plunged 54% over the past year due to low oil prices. Much like other energy companies, Transocean had a tough 2014, posting EBIT per share of $-3.81. This was down from $6.16 the year before. The company still maintains a healthy balance sheet with a current ratio above 1, indicating Transocean can cover its short-term liabilities.
During the first quarter, Bill Frels (Trades, Portfolio) initiated a new position in the company, while four other gurus added to existing positions. Three gurus including George Soros (Trades, Portfolio) sold out of their holdings.
Noble Corp PLC (NE, Financial)
Like Transocean, Noble is a Swiss offshore drilling contractor. The company’s dividend yield is 8.9%, and the payout ratio is 39%.
Over the past year, the stock declined 38% and is now priced at $17.17. The forward P/E ratio is 10.19 and the P/S ratio is 1.3. The company has also struggled with its growth rates over the past five years, with revenue declining 1.4%, while EBIT declining 28.9%.
In 2014, net income declined to $8 million, down from $783 million the year before. The graph below depicts the income trend over time.
Ronald Muhlenkamp (Trades, Portfolio) initiated a new position in Noble during the first quarter, while Ray Dalio (Trades, Portfolio) added to his stake.
Frontier Communications Corp (FTR, Financial)
Frontier Communications has the third-highest yield of the S&P 500 stocks at 8.2%, with a payout ratio of a high 942%. The company provides communication services to rural areas as well as small and medium-sized towns and cities in the U.S.
The stock declined 10% over the past year and is now priced at $4.95, with a P/E ratio of 112.7 and P/S ratio of 0.99.
Over the past 10 years, revenue has declined 3.8%, while EBIT declined 8.6%. In 2014, Frontier reported EBIT per share of $0.82, down from $0.99 the year before.
During the first quarter, Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) each added to their stakes in Frontier.
Ensco is a Texas-based offshore drilling company that operates a fleet of 74 rigs spanning markets around the globe. The company’s dividend yield is 7.2%, while the payout ratio is 133%.
The stock dropped 53% over the past year and currently trades at $24.67, with a forward P/E ratio of 7.99 and P/S ratio of 1.19.
EBIT per share in 2014 was $-10.37, down from $7.50 the year before. The graph below shows a broader picture of the earnings trend over time.
Four gurus including Arnold Van Den Berg (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) increased their stakes in Ensco during the first quarter.
CenturyLink Inc (CTL, Financial)
CenturyLink’s dividend yield of 6.74% places it as the fifth-highest yielding S&P 500 stock. The company’s payout ratio is 161%.
CenturyLink provides communication services to residential, business, governmental, and wholesale customers. The stock price declined 11% over the past year and is now priced at $32.26. The P/E ratio is 23.9 and the P/S ratio is 1.01.
Over the past five years, revenue grew by 5.8%, while EBIT declined by 13%. In 2014, net income recorded at $772 million, up from $-239 million the year before.
One point of concern is the balance sheet, where the current ratio is below 1, indicating the company cannot cover its short-term obligations.
During the first quarter, Ray Dalio (Trades, Portfolio) initiated a new position in CenturyLink, while John Keeley (Trades, Portfolio) sold out of his holding.
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