The company works hard to maintain solid rations with these nations and as a result has access to resources that are harder for other industry participants to reach. For example, the company is one of the biggest players in Africa. This provides investors an interesting way to invest in two regions that would otherwise be pretty inaccessible.
Eni SpA (ADR) (NYSE:E)’s yield is around 5.1%. However, it has more risk attached to it than Shell. While partnering with difficult nations is one potential risk, the bigger issue is that the Italian government has a large stake in the company. For example, the company has lagging operations outside of its core that appear to be dragging down overall results. It would be politically hard, but shareholder-friendly, to jettison those businesses. It’s not likely to happen any time soon.
Long-term debt makes up about a quarter of the company’s balance sheet and Eni SpA (ADR) (NYSE:E) has a long history of robust profitability (it earned over 6.60 euro a share last year). Income investors willing to take on the political issues should take a look.
French Giant
France’s unemployment is also over 10%. That’s a drag on the country’s economic fortunes and a black mark against Total. That said, while not as well known in the U.S. market, Total is an important global player in the energy market.
It earned over 4.70 euro a share last year and long-term debt makes up less than 25% of Total’s capital structure. Despite the weakness in its home market and Europe, it is making plenty of money and has the financial strength to survive over the long haul. On this basis alone, the oil major with its around 4.1% yield is worth a review by income seekers.
However, the company has a strong position in the chemicals industry, has been investing heavily to find new reserves, and, like Shell, has years of experience in liquified natural gas. And, Total SA (ADR) (NYSE:TOT) has a long history of dealing with the same “troublesome” nations as Eni SpA (ADR) (NYSE:E). It isn’t as attractive as the other two oil majors presented here, but it is a solid industry participant.
The World Loves Oil
There’s little doubt that the world runs on oil. That’s not going to change any time soon and buying companies that fill that need is a good option for dividend seeking investors. Shell is among the best risk-adjusted ideas in the oil patch today. Eni SpA (ADR) (NYSE:E) and Total both have more risk attached to them, but remain interesting options yielding notably more than U.S. counterparts like Exxon.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Total SA. (ADR). Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article International Oil Stocks on the Cheap originally appeared on Fool.com is written by Reuben Brewer.
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