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Invest In African Oil With Kosmos Energy (NYSE: KOS)

 March 23, 2012 01:30 PM
 


By 2015, countries along of the Gulf of Guinea are expected to supply one-quarter of the United States' oil imports.

I'm one of those "dividend guys."

I believe dividend stocks should be the foundation of everyone's portfolio. The reasons are simple: They're constantly churning along, throwing off income and are typically less volatile than non-dividend paying stocks.

Plus, dividend-payers, and those that increase their dividends every year, have completely beaten all sectors of the market over the long term.

[Related -7 Deep-Value Energy Leaders With 68% Upside]

So, I'm always on the lookout for solid, dividend-paying companies to buy on dips. That way I can get in at a discount, snag a premium on the dividend yield, and catch the wave back up as the share price normalizes and momentum carries it even higher.

But there's another facet to my strategy…

And that's to use some of the money spun off by my dividend-payers to invest in more speculative plays when an opportunity comes along. By doing this, I can make those dividends go even further. Then the returns I get from the more speculative plays I roll back into dividend-paying companies. And the whole cycle starts over again.

But as always, my same tenet applies – I want growth, but also value.

The Wild, Wild West

With oil prices securely above $100 per barrel at the moment, there's still a mad dash on development.

[Related -Weaker Earnings Will Result In Higher Corporate Default Rates; "Zombie Companies" Yet To Be Hit]

There are a lot of regions – both onshore and offshore – that are booming. And one of the parts of the world piquing considerable interest is Africa.

Africa is truly a rough and tumble frontier market. There are plenty of resources to develop, but also plenty of political and social instability in some regions.

Northern Africa was the spark of the sweeping Arab Spring movement last year. And we're all well aware that the governments of Tunisia, Egypt and Libya were overthrown, while Sudan officially separated into two countries.

Those northern African countries are continuing to rebuild. And there are a host of ongoing ailments.

On the E&P side, East Africa is home to one of the jewel discoveries in 2011.


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