Falling Oil Prices Producing Attractive Dividend Yields

Oil prices fell 20% from May 3^rd to May 17^th – a dramatic decline for only a two week period. Since then, oil prices seem to be hovering around $70 per barrel after reaching an 18-month high of $87.15 a barrel on May 3^rd.

Even the massive oil spill in the Gulf of Mexico has been unable to stop the plunge in oil prices despite being one of the key headline stories for the month of May.

Investors in energy stocks have probably felt like there has been a massive spill in their portfolios the past few weeks. Since the explosion on the Deepwater Horizon rig on April 20^th, Transocean’s (RIG: 50.53 +2.20%) stock price has plunged 38% and BP (BP: 46.77 -0.43%) has seen their shares fall 30%.

The declines have not been limited to just the major players in the gulf spill either. Energy stocks in the S&P 500 have declined 15% on average since April 20^th. These declines have helped to push the S&P 500 down 10% over the same time period.

The media has highlighted the fact that falling oil prices are a benefit to consumers who will be paying less at the pump this summer. However, lower gas prices are not the only benefit that people should be taking advantage of. Falling oil prices are also producing attractive dividend yields among stocks in the energy sector.

Diamond Offshore Drilling (DO: 62.59 +0.41%) has fallen 24% in sympathy with Transocean. The company reported strong revenue and earnings results last month, but reduced their dividend due to declining day rates. However, with the stock price decline the offshore drilling firm still offers investors an impressive 8.7% dividend yield.

Spectra Energy (SE: 31.10 +0.29%) is another energy stock with an attractive dividend yield of 5.1%. The stock has fallen 16% since April 20^th, but the natural gas play has a tremendous history of paying dividends for 81 consecutive years.

The major players in the energy sector are also sporting attractive dividend yields these days. Chevron (CVX: 106.37 -0.37%) and ConocoPhillips (COP: 71.55 -0.97%) have both seen double-digit declines in the share price since the Gulf incident. That’s helped to push their dividend yields above 4%.

Even industry giant, Exxon Mobil (XOM: 84.88 -0.52%), is looking more attractive for dividend investors. XOM has been notorious for paying investors a low dividend yield. Now with their stock price near a 52-week low, Exxon Mobil is sporting a decent 3% dividend yield. Investors can also expect future dividend increases, as the XOM has an impressive history of increasing their dividend each of the last 28 years.

With dividend yields increasing, investors have options besides looking strictly at investing in gold.

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