Oil prices soared after an attack on oil facilities in Saudi Arabia last week, which ignited geopolitical concerns. As a result, oil stocks jumped on the news, which presents an opportunity for investors. Many oil stocks have strong cash flow and high dividend yields and could produce even stronger growth going forward if oil prices continue to rally.

Of all the oil stocks investors can buy, one that looks particularly attractive right now is Halliburton (HAL). Halliburton has multiple competitive advantages while giving investors exposure to rising oil prices. The stock also offers a high dividend yield of 3.7%, making the stock particularly interesting for income investors.

Business Overview

Halliburton provides products and services to the energy sector. It has significant international exposure, with approximately 40% of revenue derived from outside North America. Halliburton itself does not drill for oil; instead, it services customers that do. As a result, Halliburton’s financial results are closely aligned with oil prices.

The company has struggled in recent years, as oil prices have remained stubbornly low. Customers in the oil and gas industry have cut backorders on new equipment and services due to weak commodity pricing. But this could present investors with an opportunity for upside, as Halliburton will benefit from any prolonged rally in oil prices.

Halliburton is building on a good start to the year. The company reported a strong second-quarter earnings report, and growth could accelerate even further if oil prices continue to rise.

Focusing On The International Markets

Halliburton’s international exposure gives it a tremendous advantage. Last quarter, while North America revenue declined 13%, international revenue increased by 13%. The discount of West Texas Intermediate crude to Brent crude accounted for the diverging results. Overall, Halliburton’s adjusted earnings per share soared over 50% last quarter.

Halliburton expects these trends to continue. Management reiterated its expectations for high single-digit revenue growth in international markets for 2019. As a result, 2019 should be another year of growth for Halliburton. Its steady profitability fuels its impressive dividend payout.

Halliburton currently pays a quarterly dividend of $0.18 per share or $0.72 per share on an annual basis. At the same time, the company is expected to generate earnings-per-share of $1.31 for 2019. As a result, based on full-year projections, Halliburton is expected to have a dividend payout ratio of 55% for 2019. This is a modest payout ratio which allows Halliburton to invest in growth initiatives, pay down debt or repurchase shares, while also leaving enough cash flow for dividends.

Final Thoughts

At less than 15x earnings, Halliburton is a cheap stock. The market could be underappreciating Halliburton’s outlook, particularly if oil prices continue to rise, which would be a major positive catalyst for the company.

In the meantime, investors receive a high dividend yield of 3.7%. This makes Halliburton one of the top oil stocks for income investors.