Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

That's because as demand increases for both fuel sources, there's more bookings for the company's drills. Right now, drills are moving from the more familiar Gulf of Mexico to foreign markets. For the last 5 years, half of its drills were in regional waters. Now it's down to 33%. The shift to foreign waters is better for the company since most of that drilling is for oil, not natural gas. That means longer term contracts.

And the drills are getting better. They can get deeper by 25%. Upgrading current equipment and new rigs account for the improvement. With additional depth, the rigs are in demand as the market is moving toward more deep water drilling.

Rigs go out just like rental cars. They're used for a purpose, then contracts expire and are either renewed or sent back home. Lately rigs are going out at rates lower than previously booked. That suggests ones coming off long term contracts may see renewal rates fall as well. Even with that, demand is strong enough that analysts see good profitability for 2010, though not as strong as 2009.

Last year finished at $9.89 earnings per share, ahead of the $9.43 in 2008. In 2007, earnings were $6.54. This year, 34 analysts have a consensus estimate of $8.87 with a range of $7.27 to $10.15. Next year, the consensus is for $9.36.

Those earnings bring us back to the dividend and the company's current payouts. In the last 4 quarters, it paid out $2.00 a share, $1.875 in a special dividend each quarter. Remember the stated dividend is $ .125 a quarter (50 cents a year). That's what the company commits to. And if management decides to buy another rig (2 were purchased last year), that would mean less cash flow for the dividend. Or if prices move quickly down for rigs and/or oil and gas, that would affect the payout. But as of now, the dividend of $2.00 a quarter looks like a good bet. On an $88 stock, that's a return of 9.1%, if the payout stays at $2.00 a quarter.

More numbers: Market Cap is $12.21 billion. Trailing P/E is 8.88. Forward P/E is 10. Price to sales is 3.36. Price to book is 3.56. Book value is $26.12. Operating margin for the last 12 months was 52.19%. Profit margin was 37.90%. Return on equity was 39.44%. Revenues were $3.63 billion. Total cash is $777.3 million for $5.59 a share. Total debt is $1.50 billion or 29% of capital. Current ratio is 4.17. There are 139 million shares outstanding. Institutions have 98.30% of the stock.

Income investors will find plenty to investigate here, especially if they believe the price of oil and/or gas will rise again.

- Company Web site: www.diamondoffshore.com