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.

December 15, 2010 - Total S.A. (TOT-NYSE) together with its subsidiaries, operates as an integrated oil and gas company worldwide. The company has three segments: Upstream, Downstream, and Chemicals.

The Downstream segment engages in refining, marketing, trading, and shipping crude oil and petroleum products. It also produces a range of specialty products, such as lubricants, LPG, jet fuel, special fluids, bitumen, marine fuels and petrochemical feedstock. The company held interests in 24 refineries located in Europe, the United States, the French West Indies, Africa, and China, as well as operated a network of 16,299 retail stations worldwide.

The Chemicals segment produces base chemicals, including petrochemicals and fertilizers, and has rubber processing, resins, adhesives, and electroplating activities. The company was founded in 1924 and is based in Courbevoie, France.

Total is one of the largest publicly traded international oil companies. In 2009, it produced: 1,381,000 barrels of crude oil and liquids a day (that's 5% lower than in '08) and 5.3 billion cubic feet of natural gas, 2% higher than in '08. Proven reserves at the end of 2009 were 5.7 billion barrels of oil and 26.3 trillion cubic feet of natural gas. The estimated pretax present value of the reserves at the end of last year was $54.3 billion. If you like oil and gas as an investment, you should know Total.

Some of Total's refineries may have their best days in the rear view mirror, as far as product demand goes. But management is expanding its presence in Saudi Arabia, building a new facility there by 2013 which should compensate for the loss of revenue nearer to home. There are also blueprints for chemical plants in Asia.

A concern should be observed: the company operates on the euro. It reports earnings and pays its dividend in euros. That means if the European Union has severe problems and one or two more countries need bailing out fiscally, the euro will weaken against the dollar. Then the dividend will be lower because the euro will buy fewer dollars when it is converted. That concern put pressure on these shares, and the stock underperformed compared to its industry group. If you're bullish on the euro, this is another way to benefit from it strengthening. If you're not, you may find this too much of a barrier to consider the stock.

If you do take the risk, the reward is fairly good. Dividend payments this year will be $2.70. One was made in June and the last one was made on December 6. The ex-dividend date was Nov. 9. Dividends are paid twice a year. The last 4 years, they were $2.19, $2.80, $3.10, and $3.28.

The company is enjoying better results in its gas operations, with output up 18% this year, a result of acquisitions and new developments. Oil pumped was down a little but together oil and gas production was up 6% for the year. Analysts think future average annual production increases will be about 2%.

More numbers: Market Cap is $118.91 billion. Trailing P/E is 8.42 and Forward P/E is 7.82. Price to sales ratio is .66. Price to book is 1.56. Book value is $34.49. Operating margin for the last 12 months was 13.77% and Profit margin was 7.80%. Return on equity was 19.79% and Return on assets was 8.77%. Revenues were $182.06 billion for the last year. There's $26.68 billion in cash for $11.94 a share. Total debt is $42.52 billion. Debt to equity is .55. Current ratio is 1.36. Beta is .89. For the last 52 weeks, the stock is down 14.42% compared to the S&P 500 index being up 12.06%. 52-week high was $67.52, the low was $43.07. There are 2.23 billion shares outstanding.

Income investors will like the yield and if analysts are right about earnings, the dividend should be higher next year. But this stock isn't as straighforward an investment for U.S. investors. The state of the European Union and the strength or weakness of the euro can change the yield on this stock quickly. On the plus side, there are plenty of proven reserves in oil and gas to last for a long time. That means this stock could be a strong hedge against inflation when it comes back.

- Company Web site: www.total.com

- Ted Allrich