If someone thinks Diamond Offshore (DO) is a worthy investment at this time, that person doesn't understand the magnitude of the catastrophe in the Gulf of Mexico and its' impact on the future earnings of offshore drillers.
As the person who initiated this thread, I have come to the same conclusion. Although the dividend is now over 10%, if rigs are idled due to drilling moratoria, or if new regulations are more burdensome, I can't have confidence that the dividend will be maintained. Especially as the large part of it has always been presented as a 'special' dividend, rather than a regular dividend - so presumably there'd be less inhibition about cutting it. Short term the stock price will probably keep falling anyway.
So, interesting, but I guess I'll stick to my land-based MLPs. After all, if I want a 10% divvie, I can find plenty of MLPs that fit the bill with less risk.
That's correct! I'm long LINE and NE, SDRL. The div on DO is nice but taxable. Also the future required upgrades on safety gear are going to cost the drillers over the next couple of years. I would not choose DO over LINE for new money at this point.