Royal Dutch Shell
Royal Dutch Shell (RDS.B) has been struggling of late, too, but remains a great long-term income play. The Netherlands-based oil giant rewards investors with a hefty payout of 90 cents each quarter — which translates to a 5%-plus yield as of current prices.
RDS has paid dividends since 1947, just improved its payout this year and has grown its dividend by 62% since 2005 (when its stock split).
Meanwhile, Royal Dutch Shell boasted $7.2 billion in free cash flow for the first half of 2013, and management said it expected to achieve $175 billion to $200 billion of cash flow from operations from 2012 through 2015 in a $80-to-$100 oil price scenario. Oil prices now are north of $100.
Shell’s recent weakness has a silver lining. Sure, the company missed expectations in the most recent quarter thanks to attacks on its operations in Nigeria and a writedown of its North American shale assets, but the resulting selloff makes the stock look like a bargain. RDS.B is trading at just 9 times trailing earnings, while rivals Exxon Mobil (XOM) and ConocoPhillips (COP) both sport P/Es above 11.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.