After hitting a new 52-week high of $16.21 in early September, the share price of leading vertically integrated energy company Origin Energy Ltd (ASX: ORG) has been slammed over the past few months in line with the sinking oil price. The stock has now dropped around 28%.
That's approximately 25% more than the decline in the S&P/ASX 200 (Index: ^A XJO) (ASX: XJO) over the same period!
The falls have left Origin's share price at $11.36, which implies a financial year (FY) 2015 price-to-earnings (PE) ratio and yield of 16.7x and 4.4% respectively, based on analyst consensus data provided by Morningstar.
Demand for yield is as strong as ever
With interest rates at record lows, investors continue to clamour for defensive high-yielding stocks such as Telstra Corporation Ltd (ASX: TLS). This trend doesn't look to be slowing at all and arguably could be getting even stronger.
This situation is bound to keep investors attracted to Telstra's FY 2015 forecast yield of 5.3%, however while Origin may be trading on what could be considered an uninspiring FY 2015 yield, savvy investors who look further into the future and consider the boost to cash flow expected to result from the APLNG project will be more interested in forecasts for FY 2017.
With a forecast dividend in FY 2017 of 76.2 cents per share (cps) this equates to a yield of 6.7%, not only is this above Telstra's forecast yield of 6.3% but it could be set to continue growing even more post 2017, which would add to the investment case for Origin over Telstra.
