Bear Stearns: US tax change likely to make oil stocks more attractive

The reduction on federal tax dividends contained within the $350 billion US tax cut package is likely to make oil stocks more attractive to some investors, said analyst Frederick P. Leuffer of Bear Stearns & Co. Inc., New York."For shareholders subject to the top income tax rate, the cut represents an effective boost in after-tax dividends of more than 38%. This is likely to be seen as good news for high-yield stocks, where dividends are perceived to be secure, such as certain major oils," Leuffer said in a May 27 research note.Current dividend yields sometimes can provide a better indicator of an oil company's financial strength than can the most sophisticated cash flow discount mode...

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