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07-24-2015, 01:02 PM
(This post was last modified: 07-24-2015, 01:03 PM by Vincenzo.)
I'm getting crushed in Helmrich & Payne - a dividend champion. When I bought it, I knew that a hit in the price of oil would adversely affect the stock price, but in hindsight I had no idea the extent.
Looking back at historical prices of oil, it looks to me that the average price from around 1986 to about 2003 is about $35, and it looks like it's headed there again. If I look at HP's stock price at around 2003, I see that it was anywhere between $10-$13/share on a split-adjusted basis. Holy cow.
Someone hold me. 
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07-24-2015, 02:13 PM
(This post was last modified: 07-24-2015, 02:13 PM by Jimbo.)
(07-24-2015, 01:02 PM)Vincenzo Wrote: I'm getting crushed in Helmrich & Payne - a dividend champion. When I bought it, I knew that a hit in the price of oil would adversely affect the stock price, but in hindsight I had no idea the extent.
Looking back at historical prices of oil, it looks to me that the average price from around 1986 to about 2003 is about $35, and it looks like it's headed there again. If I look at HP's stock price at around 2003, I see that it was anywhere between $10-$13/share on a split-adjusted basis. Holy cow.
Someone hold me.
Im in the same boat so I guess we could cry a river and float on down the drain.
Jim
(07-24-2015, 01:02 PM)Vincenzo Wrote: I'm getting crushed in Helmrich & Payne - a dividend champion. When I bought it, I knew that a hit in the price of oil would adversely affect the stock price, but in hindsight I had no idea the extent.
Looking back at historical prices of oil, it looks to me that the average price from around 1986 to about 2003 is about $35, and it looks like it's headed there again. If I look at HP's stock price at around 2003, I see that it was anywhere between $10-$13/share on a split-adjusted basis. Holy cow.
Someone hold me.
Im in the same boat so I guess we could cry a river and float on down the drain.
Jim
The loss is only realized when you sell. Oil (and HP) will eventually comeback. Now you just need to reinvest the divvy which will buy a lot more shares than it use to.
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(07-24-2015, 02:39 PM)Caversham Wrote: The loss is only realized when you sell. Oil (and HP) will eventually comeback. Now you just need to reinvest the divvy which will buy a lot more shares than it use to.
and THAT is the proper attitude.
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07-24-2015, 05:04 PM
(This post was last modified: 07-25-2015, 08:05 AM by Dividend Watcher.)
I'm long too. Yes, they're getting hammered just like most other oil service companies. Beside the juicy dividend and reinvesting averaging you down, here's some other points that salve the wounds for me:
- Debt level is still lower than most competitors
- HP has the AC drive patented Flexrig which by most accounts is the most efficient drilling platform.
- Their latest quarterly report re-emphasized their capital investment in further development in steering mechanisms for horizontal drilling (also one of their key selling points).
- Over 40 years of dividend increases. Yes, I know it's not the same between pre-2012 and now but management still should be jealous of their record.
- The business has been an ongoing concern for over a hundred years. You think they've learned something about how to survive the bad times.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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It is hard looking at those capitol losses. My portfolio's in the red for the first time in its rather brief history--which is a b*tch plain and simple.However, its throwing off more income than it ever has--even with ARCP's closed purse-strings (and a few upstream pipeline cuts). Keep your eye on the goal--increasing income stream through a diversified DGI portfolio. I got some real dogs when I decided to make 5% of my portfolio speculative--if not ARCP then LINE will surely keep me awake a few nights. But diversification has keep my overall income stream moving always in one direction...UP!
Trust the force Vince ;-)
Ronn
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(07-24-2015, 05:04 PM)Dividend Watcher Wrote: I'm long too. Yes, their getting hammered just like most other oil service companies. Beside the juicy dividend and reinvesting averaging you down, here's some other points that salve the wounds for me:
- Debt level is still lower than most competitors
- HP has the AC drive patented Flexrig which by most accounts is the most efficient drilling platform.
- Their latest quarterly report re-emphasized their capital investment in further development in steering mechanisms for horizontal drilling (also one of their key selling points).
- Over 40 years of dividend increases. Yes, I know it's not the same between pre-2012 and now but management still should be jealous of their record.
- The business has been an ongoing concern for over a hundred years. You think they've learned something about how to survive the bad times.
Great points! It looks like a screaming buy at this level.
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07-24-2015, 08:41 PM
(This post was last modified: 07-24-2015, 08:41 PM by rayray.)
I have a few shares of HP and it makes me feel secure that the divi's will enable this puppy to compound nicely through this market. This is a top notch company with best in class for efficiency, their rigs and expertise will be highly coveted throughout the oil sector even more so.
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07-25-2015, 07:55 AM
(This post was last modified: 07-25-2015, 08:07 AM by Dividend Watcher.)
Since words (above) didn't do it for me and I only glanced at the quarterly report, I had to go back and look closer ...
As of 3/31/2105 (latest quarterly posted)
Current Ratio: 4.0
Cash & Equivalents: $719M vs. $361M six months ago
Net increase in cash & equivalents: $358M
Revenues: $883M vs. $893M in 2014 (down 1.1%)
Operating income: $227M vs. $255M in 2014 (down 11%)
Payout Ratio (per share): 50%
All Debt/Equity: 11.4%
All Debt/Cash & Equivalents: 80% (they can pay off ALL their debt with cash)
The 3rd quarter 2015 (6/31) results could be worse but still. Do these look like the company is ready to cut the dividend or fall apart? If I had any cash left, I'd be starting to average down here. Instead, I jumped the gun a few months ago. I'll just have to reinvest and watch from the sidelines. The >4% yield helps.
It may be painful to watch for the next year or so but patience will win out I'm guessing. It's only a loss if you sell at these prices.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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07-25-2015, 09:59 AM
(This post was last modified: 07-25-2015, 10:10 AM by KenBob.)
I haven't gone in depth to research this company; however, with a forward PE ratio of 63.6 (per Yahoo Finance) the payout ratio goes to 3.13. I think there is a danger of a dividend cut.
That is not to say that this stock may not be a good deal in the future; however, I think there is going to be further pain before the oil market recovers.
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I thought the 2013 + 2014 div increases by HP were a huge, reckless misstep by an otherwise responsible management team. I don't necessarily think the div will be cut, but I do think they'll have to go to the debt market to subsidize the dividend for a few years. HP is in a fine position to do this, but they wouldn't have to if they had only stayed on the small double digit bumps a few years back.
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Thanks to you all - especially Caversham, Dividend Watcher, ronn38, and rayray. I knew you folks would help give me perspective.
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