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. 

Seadrill is a selection of Motley Fool co-founder David Gardner; it has helped lead his stock picks to gains of more than 113% in our Stock Advisor service since it launched in 2002. Those returns have beaten the market by more than 87%. David has managed to trounce the market by always being on the lookout for revolutionary stocks and recommending them before Wall Street catches on to their disruptive potential. If you're interested in how David discovers his winners, click here to get instant access to a personal tour behind David's Supernova service.


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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