With its 4.6% trailing yield and prospects of a pickup as Gulf drilling recovers, Diamond Offshore is a shareholder-friendly gem, writes Jack Adamo of Insiders Plus.

Diamond Offshore Drilling (DO) recently reported lower earnings of $1.80 per share, versus $2.09 in last year’s first quarter.

Naturally, the drilling moratorium in the Gulf was the culprit. Utilization in the jack-up part of its fleet (shallow water rigs) was quite low, since the Gulf was their biggest home.

The permitting process for Gulf drilling seems to be making progress, so there’s a good chance that will pick up toward the end of the year. Meanwhile, some of these rigs are being deployed elsewhere, though there are still some sitting idle.

The company announced it will pay a special dividend of 75 cents, along with its regular dividend of 12.5 cents a share, to shareholders of record as of May 2. [The company has paid the same special and regular dividends quarterly for the last year, giving the stock a trailing dividend yield of 4.6% at Monday’s price above just above $75—Editor.]

Diamond has paid $28 in dividends since it started the special-dividend program in 2006. This is my kind of company. Keep your stock buybacks.

The CEO also commented to an analyst on the conference call that he preferred growing organically and only considered acquisitions opportunistically, not as an overall growth strategy. Again, my kind of company.

Analysts’ estimates are for $6 in full-year earnings, with a drop of approximately 8% in 2012, down to $5.47. That may be so, but the stock certainly isn’t acting like earnings will be lower. It is moving steadily higher.

I suspect that, short of another recession, earnings will surprise to the upside next year. Of course, another recession is far from out of the question, but this is a good company I’ve followed a long time, and it should treat us well regardless.

Note that until the interruption of Gulf drilling, Diamond Offshore stock had tripled over the last decade, while the market is barely in positive territory. At its current pace, it shouldn’t take long for Diamond to regain its triple status.

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