Because Marathon is an E&P firm first and foremost, it's got much less in the way of midstream and downstream assets than most peers -- a fact that gives MRO deeper margins and less in the way of capital costs. Marathon's costs are pretty standard for the industry, but that's looking a whole lot more attractive with oil prices on the high end of their historic range. The firm has the most upside is in its shale portfolio, which still has room for unproven reserves to beat analysts' expectations.
Financially, MRO is in good shape, with a manageable debt load on its balance sheet and access to plenty of liquidity. The firm's cash generation makes a boost to its 17-cent quarterly dividend look likely. Right now, Marathon pays out a 2% yield -- I'd expect that to get boosted in the near-term.
Baker Hughes (BHI) is another oil name that's enjoying an energy sector rally in the near-term. Year-to-date, shares of the $20 billion oil servicer have climbed 10%, besting the broad market's climb by a fair margin. Right now, BHI pays out a 15-cent quarterly dividend -- but that 1.34% yield could be due for an upgrade in 2013.BHI is a major player in the oil field service business, providing drilling and pumping services, oil field chemicals, and specialized tools to production companies looking to get their commodities out of the ground as effectively as possible. The firm's operations are spread across 90 countries, giving it the flexibility to service nascent oil industries in emerging markets. Competition is tough in the oil service business, so BHI's proprietary drilling technology is critical for the firm's success -- the drilling expertise gets BHI's foot in the door to offer less specialized products and services on any given project. The firm generates considerable free cash flows, a critical factor in its ability to hike its dividend in 2013. As oil prices continue to make a steady ascent, so too should E&Ps' willingness to shell out more cash for BHI's services. U.S. Bancorp Banks haven't exactly been known for their dividend potential of late. But U.S. Bancorp (USB) has been the exception rather than the rule lately. The $62-billion banking stock may not get the same status as the big four, but its scale is mammoth nevertheless. And its 19.5-cent dividend payout looks ready for an increase.
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