DRIP Investors: Bet on Baker Hughes

10/29/2014 7:00 am EST


David Fish

Executive Editor, Moneypaper

The latest bout of doom-and-gloom could be expected, following a few weeks of sharply lower stock prices and speculation about the lasting effect of Ebola, ISIS, and declining oil prices, observes David Fish, dividend reinvestment expert and editor of MoneyPaper.

But the most remarkable thing about this is that so many people fail to acknowledge that we have been here before, countless times, in fact. None of this is permanent, nor should it be.

The stock market will not close for good next week or next year and the decisions we make in the short-term will only have lasting effect if we react emotionally and sell when we should be buying (or buy when we should be selling).

The biggest mistake that people make is to withdraw completely because they are overwhelmed by fear. That prevents them from enjoying years or even decades of growth.

While investors worry that there is no end in sight, we would point to our latest featured dividend reinvestment plan recommendation, Baker Hughes (BHI).

The company provides drilling, production, and reservoir products and services for the oil and gas industries in more than 80 countries, operating two segments.

Its Drilling and Evaluation segment provides drilling fluids, drill bits and systems, and logging, while its Completion and Production segment provides tools, specialty chemicals, pumps, and recovery services.

In 2013, about 52% of the $22.4 billion in annual revenues came from North America. Revenues have more than doubled since 2009, largely due to the 2010 acquisition of rival BJ Services.

Consensus estimates call for BHI to earn about $4.12 per share this year, up from $2.62 in 2013, and to rise to about $5.33 in 2015 and Value Line projects earnings per share of about $7 in three-to-five years.

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