Helmerich & Payne, Inc. (HP), Nabors Industries Ltd. (NBR): Suddenly This Becomes a Dividend Play

Transocean LTD (NYSE:RIG) and ENSCO PLC (NYSE:ESV) trade at roughly 8 times forward earnings while Helmerich & Payne, Inc. (NYSE:HP) and Nabors Industries Ltd. (NYSE:NBR) trade at around 11 times forward earnings. Investors in the land drillers would have to be certain that drilling demand is set to expand dramatically in the next year to pay those higher multiples.

Bottom line

For yield investors, Helmerich & Payne, Inc. (NYSE:HP) should be more attractive now that the stock provides a yield in excess of 3%. In general, investors will invest in the sector based on the desirability of land versus offshore drilling. For now, the offshore drillers appear to offer the better valuation metrics while also providing higher dividends.

Helmerich & Payne does offer the unique low-risk balance sheet for any investors concerned about a future shock in the energy markets. Other than that, the company offers a good investment though better valuations and yields exist with other stocks in the general energy contract drilling sector.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool owns shares of Transocean. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Suddenly This Becomes a Dividend Play originally appeared on Fool.com is written by Mark Holder.

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