Big is in.

The question marks lingering about the strength of the recovery has prompted many investors to seek shares in large, stable companies that have weathered the downturn in good shape. The 100 largest public companies in the world have beaten the MSCI World Index and the S&P 500 by more than 20 percentage points since the start of the year.

These are among the most reliable companies in the world, though most don't pay big dividends. Just six companies, in fact, yield 6% or more. Fortunately, they're all available in the U.S.

BP pays more in dividends than any other 6%-plus yielding company -- more than $10 billion in dividends every year, about the same as the gross national product of Cambodia.

BP, the largest oil and gas producer in the United States, is a 100-year-old company that explores for oil and gas in 29 different countries and operates 24,000 gas stations around the world. BP's business mix by 2008 revenues is 22% exploration and production. The rest of its revenue comes from refining and marketing.

The company has said on many occasions that it is committed to maintaining a high dividend. Not only does BP pay more in dividends than any other company, it has also raised its distribution every year for the past 10. During the past five years, the rate of increase has averaged +15% a year. BP is paying $0.84 a share each quarter, which amounts to an annual dividend of $3.36.

BP has a diversified business, but the company ultimately makes money by selling oil and gas. Years of profitability has allowed BP to load up its coffers. Its balance sheet shows $9 billion in cash and a microscopic long-term debt-to-equity ratio of 0.2 to 1.

At 1.8 times book value with a 9.6 forward P/E, a convincing case can be made that BP is undervalued relative to its peers. Exxon Mobil's (NYSE: XOM) forward P/E is 12.5. Chevron (NYSE: CVX) sells for 10.3 estimated earnings.

BP announced an enormous oil discovery in the Gulf of Mexico at the beginning of September. The field -- thought to be one of the deepest discoveries ever -- rests underneath 4,132 feet of water and more than six miles of seabed. BP owns 62% of the site.

Early estimates suggest the site may hold four to six billion barrels of oil equivalent (BOE). For this kind of field, producers are typically able to recover 20% to 35% of the crude, which puts the find at 800 million to 2.1 billion BOE.

The company produces about four million BOE every day. That means that the Gulf discovery alone could produce the company's total worldwide output for as many as 525 days. In total, BP had about 18.1 billion BOE in proven reserves at the end of 2008.

While the oil from this field won't be on the market any time soon, the discovery speaks to the continued success of the company -- and the continued dependability of its dividend -- in the future. As such, it's a compelling play for income investors.

Anthony Haddad
Staff Writer
StreetAuthority