Petrofac Limited: 1 of 2 value stocks yielding over 6% I'd buy right now

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Petrofac oil pipes

Shares in oil services company Petrofac(LSE: PFC) have fallen by around 45% year-to-date as the company has lurched from one problem to another. However, despite the issues overhanging the company, I believe that the shares could be a great buy at current levels. 

Under investigation

Petrofac is currently under investigation by the SFO regarding allocations of bribery. Specifically, the SFO announced in May that it would investigate allegations that the firm used scandal-hit Unaoil as a middleman to secure consultancy contracts worth an estimated $2bn. Chief executive Ayman Asfari and chief operating officer Marwan Chedid have been questioned as part of the ongoing probe, and Mr Chedid has since been suspended. 

Still, despite this overhang, during the past few months, the company has continued to win work from customers. The latest piece of work is a contract worth more than $700m with Sakhalin Energy Investment Company Ltd for its onshore processing facility on Sakhalin Island. 

Pushing ahead 

The fact that Petrofac continues to win work indicates to me that it's business as usual at the group and despite the SFO probe, the company's customers seem to continue to believe that it is an excellent partner to work with. 

And that's why I'd buy the stock for its yield today. With work still coming in, the company is not going to collapse overnight, and the shares look cheap compared to current earnings potential.

Right now the shares are trading at a lowly forward P/E of 5.8, which implies to me that there's already plenty of bad news baked into the stock. Meanwhile, the shares support a dividend yield of 7.1%, and the payout is covered twice by earnings per share.

With its discount valuation and high-single-digit yield, I believe Petrofac is a highly attractive value and income investment. 

Turnaround gaining traction 

Over the past three years, shares in small-cap broker Cenkos Securities(LSE: CNKS) have lost more than half of their value as a dearth of market activity has weighed on profitability. Pre-tax profit dropped from £26m in 2014 to just £4.4m for 2016. But now it looks as if the firm is finally turning a corner. 

Today Cenkos announced its first-half results and reported a 91% increase in revenue as well as 156% growth in profit before tax to £4.2m. Basic earnings per share for the period jumped 406% and off the back of these figures, management hiked the interim dividend payout by 350% to 4.5p. 

One of its most attractive traits, in my view, is management's desire to return as much cash to investors as possible. Since its flotation in 2006, the company has returned £105.6m of cash to shareholders, equivalent to 160.8p per share via buybacks and dividends. That's more than the company's entire market value today. 

I believe this trend is set to continue. City analysts have pencilled in a full-year dividend payout of 11p per share for the company, and considering the interim payout of 4.5p, this full-year target is not wholly unrealistic in my view. Assuming the company does indeed meet this objective, for the full-year, the shares are on track to yield 9.6%, a figure I believe is hard to pass up.

You can't live without dividends

Like most other investors, I love dividends and that's why I'm interested in Cenkos as well as Petrofac. 

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Rupert Hargreaves does not own any share mentioned. The Motley Fool UK owns shares of Petrofac. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.