Transocean LTD (RIG), Noble Corporation (NE), Seadrill Ltd (SDRL): Buy This Deepwater Drilling Stock if…

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If there’s one rub against Seadrill it’s that the company has amassed a rather hefty debt load in its quest to build out its fleet. At last count its debt stood at more than $11 billion. However, Seadrill Ltd (NYSE:SDRL) does have a revenue backlog twice that amount, which gives me confidence in its ability to repay or refinance its debt. That’s why I don’t think the company will have any problems continuing to pay and likely grow its dividend. It’s that dividend, now yielding over 9%, that’s the real reason why you’d want to own Seadrill.

My Foolish take
I really like the big dividend of Seadrill and, despite its heavy debt load, I think it can easily sustain and grow that payout in the future. I also like the fact that the company has one of the younger fleets in the industry that’s backed by its long-term contracted backlog. Add it all up and on the surface Seadrill has my vote.

The article Buy This Deepwater Drilling Stock if… originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill and Transocean.

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