Is Seadrill's Dividend Safe?

Seadrill has the highest dividend yield of all the offshore drillers, currently pushing 9%, offering the rare opportunity of both capital gains and dividend yields for investors. However investors could view the company's leverage ratio as a possible red flag since Seadrill uses its cash from operations to cover the dividend while using debt to grow the firm. While increased leverage can derail companies during market downturns, Seadrill seems to be well-positioned with a backlog of $21 billion though 2017. Check out the video below for more information on what investors need to watch with regard to Seadrill's outsized dividend.

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The article Is Seadrill's Dividend Safe? originally appeared on Fool.com.

Joel South has no positions in the stocks mentioned above. Taylor Muckerman owns shares of Ensco. The Motley Fool owns shares of Seadrill and ExxonMobil. Motley Fool newsletter services recommend Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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