Seadrill Ltd (SDRL), Terra Nitrogen Company, L.P. (TNH): Dividend Stocks With High Revenue Visibility

Forward revenue visibility for Teekay Offshore Partners L.P. (NYSE:TOO) is $4.8 billion with the weighted average remaining contract life of 5 years. The company’s revenue visibility is boosted by new builds with one of the four shuttle tankers’ delivered and the remaining three to be delivered before November 2013. The company has also got  a 10-year contract to convert an existing shuttle tanker to an FSO which is expected to generate Cash flow from vessel operations (CFVO) of approximately $6.5 million annually.

Voyageur Spirit,another FPSO , acquired for $540 million on May 2, 2013 is an important step towards increasing annual CFVO by approximately $70 million. The fundamentals of the company are also strong with 193% CAGR of net revenue from fiscal 2008 to fiscal 2012. As of first quarter 2013 the company has generated $41.8 million distributable cash flow. With a current dividend yield of 6.5% and the company’s strategy to steadily increase the dividend payout ratio, the stock is a great investment opportunity.

Conclusion

Investment in these stocks will cumulatively give an annual dividend of around $25. Moreover, the return can be expected to increase given the undervaluation of Seadrill Ltd (NYSE:SDRL), strong and high payout of Terra Nitrogen Company, L.P. (NYSE:TNH) and good revenue visibility of Teekay Offshore Partners L.P. (NYSE:TOO). These stocks can be considered good investments on a medium to long-term perspective.

Anjum Khan has no position in any stocks mentioned. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill.

The article 3 Dividend Stocks With High Revenue Visibility originally appeared on Fool.com.

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