NEW YORK (TheStreet) -- Africa's robust growth potential has the World Bank projecting it as one of the strongest economies for the future. A previous article on TheStreet detailed how investors can profit from a prosperous Africa with such securities as Market Vectors Africa (AFK), Unilever (UL), and Total SA (TOT).
There are three reasons why Sasol (SSL), a major oil firm headquartered in Johannesburg, can be the most promising investment for profiting from the improving African economy.
1. For a growing economy, investing in Big Oil should lead to big gains.
Not only is oil the most widely used fuel source around the world, there are other goods vital for an economy. Sasol brings to market coal, synfuels, natural gas, chemicals and lubricants, in addition to operating a chain of gas stations. Rising economic activity around the world and in Africa will increase the demand for the goods and services of. The World Bank report, Africa's Ample Resources Provide an Opportunity for Inclusive Growth, states that "strong domestic demand and thriving mineral, metals, and oil exports will drive this growth."
2. Big Oil stocks are also excellent for big dividend yields.
At present, the average dividend yield is just under 2% for a member of the Standard & Poor's Index. The dividend yield for Sasol is 4.5%. The dividend is secure given that Sasol is a very profitable oil company with a low dividend payout ratio. The profit margin for Sasol is 33.9% with a dividend payout ratio of 18.7%. By contrast, ExxonMobil (XOM), the world's largest oil and natural gas entity, has a profit margin of 7.6% and a payout ratio of 33.4%.