Many investors are aware of oil driller Seadrill (NYSE:SDRL). Recently, though, Seadrill gave investors a separate investment option to choose from. Seadrill held an initial public offering for Seadrill Partners (NYSE:SDLP) in October 2012. Separations of business entities are fairly common in the oil-drilling space, as rival Transocean (NYSE:RIG) is preparing a master limited partnership IPO for later this year.

While Seadrill and Seadrill Partners might seem identical on the surface, their respective investor distribution policies differ. Specifically, each will have significantly different growth profiles in their cash returns to investors going forward. Here are the basics investors should know when trying to decipher an investment in Seadrill or Seadrill Partners.

Is Seadrill Partners right for you?
Most investors likely understand Seadrill's investment case. Last year, it racked up 14% contract revenue growth along with 17% growth in operating profits and saw strength across its fleet. In addition, it pays a huge dividend at about a 10% yield. Investors have a separate option under Seadrill's corporate umbrella to choose from in Seadrill Partners.

Seadrill Partners was formed as a growth-oriented company to own and operate Seadrill's rigs. Seadrill Partners' drilling rigs are operated under long-term contracts with some of the biggest energy companies in the world. Seadrill Partners intends to use its relationship with Seadrill to produce long-term contracts for its fleet, and its recent developments are proving its success.

These types of initiatives are common in the industry. Transocean stated in its most recent 10-K filing that an MLP vehicle would positively complement its capital structure by providing an additional source of capital and flexibility, as Seadrill Partners complements Seadrill.

Seadrill Partners has some strong momentum going. It sealed an 18-month contract extension for its West Aquarius ultra-deepwater rig. The total revenue potential for this deal is an estimated $337 million. Seadrill Partners also received a $100 million investment from Seadrill during the fourth quarter as part of an equity offering to finance the West Sirius and West Leo rig drop-downs. Seadrill Partners closed on the acquisitions of these two rigs for $2.3 billion in the fourth quarter.

Seadrill vs. Seadrill Partners
Seadrill Partners' status as a growth-oriented entity is what differentiates it from Seadrill. This is evident in the respective distributions for each company. Seadrill recently raised its dividend by 3% to $0.98 per share quarterly, which provides a huge 10% yield. By contrast, Seadrill Partners yields almost half that.

However, investors should expect Seadrill Partners to maintain stronger growth in its distribution. In the aftermath of the West Sirius and West Leo acquisitions, Seadrill Partners management recommends a quarterly distribution increase to $0.50-$0.5125 per unit, which would represent approximately 15% growth. Keep in mind that Seadrill Partners' fourth-quarter distribution was also 15% higher than the year-ago distribution, so a rapid growth pattern is clear.

That's not so for Seadrill. Seadrill gave investors a small dividend increase very recently, but it seems the company's dividend growth potential is now tapped out. Going forward, Seadrill Partners management is confident of future drop-downs and investment. This is what gives Seadrill Partners' board of directors confidence to predict high growth rates for future distributions. By contrast, Seadrill investors shouldn't expect much growth in the company's huge dividend for the foreseeable future.

In Seadrill's fourth-quarter report, it stated: "Seadrill is currently trading at a yield of 10.4% based on an annual future dividend of $3.92 per share. In the current market, the [b]oard sees limited value in increasing the current quarterly distribution beyond $0.98 per share."

The Foolish bottom line
As a result, those investors looking for current income versus distribution growth should view Seadrill and Seadrill Partners differently. Seadrill offers a massive double-digit yield, but there probably won't be much in the way of dividend growth for the time being. By contrast, Seadrill Partners yields about half as much as Seadrill but should provide double-digit distribution growth for the next few years.

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Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.