It shouldn’t be a surprise to anyone that Big Oil is big business, and while most investors likely know the usual suspects among the U.S.-based energy giants, European peers may have more to offer investors.
That’s because as opposed to their American counterparts, European energy giants are willing to send their shareholders larger portions of their profits, in the form of heftier dividend yields. If you’re an investor who craves income, these energy titans may have more for you than the U.S. oil majors.
Huge yields from across the pond
Whereas most U.S.-based oil companies pay between 3% and 4% dividend yields, you can secure much higher distributions from international competitors.
For instance, London-based BP plc (ADR) (NYSE:BP) has had its stock price weighed down for obvious reasons over the past few years. The company is still battling the financial and environmental devastation caused by the infamous 2010 spill in the Gulf of Mexico.
It’s true that BP plc (ADR) (NYSE:BP)’s profits have been adversely affected by the spill, and likely will be for the foreseeable future. At the same time, BP plc (ADR) (NYSE:BP) has shed assets in preparation for this—divesting $38 billion in all—leaving the company with financial cushioning as well as a more focused, stronger set of assets.
Moreover, the company is proceeding full-speed ahead with new growth initiatives, including major exploration finds in India and the acquisition of new acreage in Norway, Brazil, and China. All the while, BP has increased its dividend at strong rates since it resumed dividend payments in 2011, and thanks to its suppressed share price, BP plc (ADR) (NYSE:BP)’s yield is now 5.25%.
If you’re interested in high-yielding European oil majors that don’t share BP plc (ADR) (NYSE:BP)’s enhanced headline risk, you should consider TOTAL S.A. (ADR) (NYSE:TOT) or Royal Dutch Shell plc (ADR) (NYSE:RDS.A). Both France-based Total and Netherlands-based Royal Dutch Shell plc (ADR) (NYSE:RDS.A) pay 5% dividends to shareholders. And, both stocks have proven a track record of consistent profitability and have increased their dividends on a regular basis.
TOTAL S.A. (ADR) (NYSE:TOT)’s second-quarter profits slipped 3%, as a result of weak oil and gas prices. On the other hand, oil prices have spiked in recent weeks due to ongoing geopolitical tensions in Syria and elsewhere, meaning TOTAL S.A. (ADR) (NYSE:TOT) may be on the cusp of increased profitability. Furthermore, Total management points to several initiatives for investors to be optimistic about going forward. This year, the company secured a number of projects aligned with its long-term growth plans, including new developments in Africa and Australia.