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Is the Shell dividend a sign of things to come?

Is the Shell dividend a sign of things to come?

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Some stocks you buy for growth, some you buy for income. For me, the Royal Dutch Shell (LSE: RDSB) dividend was always a draw. It was with much disappointment I saw it slash its payout earlier this year. Disappointment, but understanding. In times of trouble, one must be cautious.News yesterday then, that the dividend would be increased in the next payout had me excited. What’s more, Shell said, “We are starting a new era of dividend growth”. Even better – I hope.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The Shell dividend in contextNow yesterday’s news is not exactly the greatest increase I have ever seen. Shell increased its next dividend payment by about 4% to 16.65 cents. This far from makes up for the 66% slash it undertook in April. But still, it is a move in the right direction.Shell has a good history of dividend payouts. Until this year, it had one of the longest and most consistent payout schemes in the FTSE 100. It was an income stock through-and-through.We do need to ask ourselves now though, is this latest announcement the right thing to do? I have said it before, but it is often the right decision for a firm to cut or halt dividends in times of trouble. Reinvesting cash into the business helps secure its future more than paying investors.With low oil prices continuing, Covid-19 still dominating and a recession looking ever more likely, we have to question the company’s decision this time.Shell said “Our sector-leading cash flows will enable us to grow our businesses of the future while increasing shareholder distributions, making us a compelling investment case”. The Shell dividend, unsurprisingly, is aimed at attracting investors.The future of the share priceThe Shell dividend increase will of course, help bolster its stock to some extent. It is still far from previous levels, so it is hard to imagine a new wave of income investors flocking to the stock that were not already interested.I also do believe that the cash outflow will not really harm Shell’s prospects. Oil prices are subdued at the moment but they will go back up at some point. The major factor here of course, will be Covid-19 and the airlines.Though a vaccine may be around the corner, the future of Covid-19 still seems very uncertain. In the UK and other European countries, second lockdowns are already taking place. The airline and travel industry is hanging on by a thread.The worst-case scenario I see for the large oil majors is a global recession. Let’s face it; businesses across the board are suffering. People are losing jobs and at this stage, we don’t know when it will end. Any major recession will hurt many oil-demanding firms long after Covid-19 is subdued.That said, I am still fairly positive on Shell. I am happy to hold on to the stock I already own, though perhaps not willing to increase my position just yet. Its efforts towards a green energy platform I think are good for the long term. Simply click below to discover how you can take advantage of this. 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Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. 5 Stocks For Trying To Build Wealth After 50 Karl Loomes | Friday, 30th October, 2020 | More on: RDSB Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.center_img Our 6 ‘Best Buys Now’ Shares Image source: Getty Images. Click here to claim your free copy of this special investing report now! Is the Shell dividend a sign of things to come? See all posts by Karl Loomes Karl has shares in Royal Dutch Shell. The Motley Fool UK has no position in any of the shares mentioned. 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.last_img read more