Published: October 28, 2009
Big is in.
The question marks lingering about the strength of the recovery
has prompted many investors to seek shares in large, stable
companies that have weathered the downturn in good shape. The
100 largest public companies in the world have beaten the MSCI
World Index and the S&P 500 by more than 20 percentage points
since the start of the year.
These are among the most reliable companies in the world, though
most don't pay big dividends. Just six companies, in fact, yield
6% or more. Fortunately, they're all available in the U.S.
Dividends Per Year
BP (NYSE: BP)
AT&T (NYSE: T)
Vodafone (NYSE: VOD)
Verizon (NYSE: VZ)
France Telecom (NYSE: FTE)
Deutsche Telekom (NYSE: DT)
BP pays more in dividends than any other 6%-plus
yielding company -- more than $10 billion in dividends every
year, about the same as the gross national product of Cambodia.
BP, the largest oil and gas producer in the United States, is a
100-year-old company that explores for oil and gas in 29
different countries and operates 24,000 gas stations around the
world. BP's business mix by 2008 revenues is 22% exploration and
production. The rest of its revenue comes from refining and
The company has said on many occasions that it is committed to
maintaining a high dividend. Not only does BP pay more in
dividends than any other company, it has also raised its
distribution every year for the past 10. During the past five
years, the rate of increase has averaged +15% a year. BP is
paying $0.84 a share each quarter, which amounts to an annual
dividend of $3.36.
BP has a diversified business,
but the company ultimately makes
money by selling oil and gas. Years
of profitability has allowed BP to
load up its coffers. Its balance
sheet shows $9 billion in cash and a
microscopic long-term debt-to-equity
ratio of 0.2 to 1.
At 1.8 times book value with a 9.6
forward P/E, a convincing case can
be made that BP is undervalued
relative to its peers. Exxon
Mobil's (NYSE: XOM) forward P/E
is 12.5. Chevron (NYSE: CVX)
sells for 10.3 estimated earnings.
BP announced an enormous oil
discovery in the Gulf of Mexico at
the beginning of September. The
field -- thought to be one of the
deepest discoveries ever -- rests
underneath 4,132 feet of water and
more than six miles of seabed. BP
owns 62% of the site.
Early estimates suggest the site may
hold four to six billion barrels of
oil equivalent (BOE). For this kind
of field, producers are typically
able to recover 20% to 35% of the
crude, which puts the find at 800
million to 2.1 billion BOE.
The company produces about four
million BOE every day. That means
that the Gulf discovery alone could
produce the company's total
worldwide output for as many as 525
days. In total, BP had about 18.1
billion BOE in proven reserves at
the end of 2008.
While the oil from this field won't
be on the market any time soon, the
discovery speaks to the continued
success of the company -- and the
continued dependability of its
dividend -- in the future. As such,
it's a compelling play for income
-- Anthony Haddad