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Investors Should be Cautious On Seadrill Ltd (SDRL)

While there are no critical events happening around the offshore drillers, but still the last week has passed quite a bit of topsy-turvy for Seadrill Ltd (NYSE:SDRL). The shares of the company plummeted during the last week after it announced an issue of a convertible bonds, valuing $1 billion, which was later called off post a cold reaction from the stock market. The reaction is justified given the fact that the company is already sitting on a huge pile of debt. In the meanwhile, Fox Business News‘ Charles Payne tried to explain the logic as to why investors should maintain caution for Seadrill Ltd (NYSE:SDRL).

Seadrill Ltd (NYSE:SDRL)

According to Payne, Seadrill Ltd (NYSE:SDRL) is not a recommended stock as he said, “I was cautious on it last week and I am still cautious on it.” At the same time, Matt McCall, a founder of Penn Financial Group, explained that Seadrill Ltd (NYSE:SDRL) is among one of the favorite offshore drilling stocks for investors, but concerns erupted last week after it was estimated that the company might miss its earnings number this time. Mccall added, “If they do cut the dividend, the stock will get absolutely crushed.”

Till now, Seadrill Ltd (NYSE:SDRL) has remained on the top list of its investors due to its remarkable dividend yield, which is at 10%. Therefore, the reports of an expected cut in the dividends have added to the disappointment. However, a report from Barrons highlights the Credit Susiee outlook on the expected dividend announcement by the company.

Research firm’s analyst, Gregory Lewis noted in his report that Seadrill Ltd (NYSE:SDRL) had raised its dividend in the previous quarter, when it had earlier announced the plans to keep it constant. Thus, Credit Suisse believes that the company might keep its dividend rate steady this time as well, however, it does not rule out the possibility on yet another increase this quarter.

Disclosure: none

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