Drill and Bill: 2 Paths to High Income

Focus: STOCKS

John Dobosz Image John Dobosz Deputy Editor, Forbes Media

These two stocks in very diverse industries are paying high dividends, hitting the sweet spot sought by John Dobosz of Forbes Dividend Investor.

Oil is bubbling higher again over the past month, with both West Texas Intermediate and Brent crude prices up 10%, since hitting short-term bottoms in mid-April.

Shares of US oil majors Exxon Mobil (XOM) and Chevron (CVX) are modestly higher by about 4% in that time, but several European majors, like previously recommended Royal Dutch Shell (RDS.A) and Total (TOT), have rallied 7% and higher.

Lean valuations and fat yields in the group prompt me to add another global energy giant to our list of recommendations—Britain's BP (BP). The company is one of the largest integrated oil and gas companies in the world, with upstream (exploration and production), midstream (transportation and storage), and downstream (refining and marketing) operations.

However, recent public perception and performance have been heavily influenced by the explosion and sinking of the Deepwater Horizon rig on April 20, 2010, which gushed nearly 5 million barrels of oil into the Gulf of Mexico over the next 87 days.

In the wake of the Gulf spill, BP slashed its dividend in half to conserve cash as it began paying out what today totals $10.9 billion in damages to individuals, businesses, and government.