Share Name Share Symbol Market Type Share ISIN Share Description
Diverse Income Trust (the) Plc LSE:DIVI London Ordinary Share GB00B65TLW28 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 114.00 114.00 116.00 - 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 15.5 13.9 3.7 30.6 438

Diverse Income Share Discussion Threads

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4733/5000 Total: Dividend and share repurchase 2018-2020Press release share with twitter share with LinkedIn share with facebook share via email 0 0 08/02/2018 | 8:26 Total's Board of Directors reaffirms its priority to implement the Group's industrial growth strategy and announces the return to shareholder policy for the next 3 years: Proposed dividend at € 2.48 / share for the year 2017 10% increase in the dividend between 2018 and 2020 Up to $ 5 billion of share repurchase in 2018-20 Paris - The Board of Directors, meeting on February 7, 2018, approved the Group's financial statements for the 2017 financial year and reviewed the cash flow allocation policy, including the shareholder return policy, for the 3 coming years. Despite a volatile environment over the past three years, Total has successfully repositioned itself, achieving solid results in 2017 thanks to good operating performance and lowering its organic break-even point before Brent's dividend to $ 27 / b. Major investments over the past five years have resulted in strong growth in high margin production. The Group has also strengthened by investing on a counter-cycle and has acquired resources on attractive terms. It enjoys strong visibility on the growth of its cash flow and increased financial flexibility thanks to a debt ratio (net debt on capital) lowered to 12% at the end of 2017. Confident in the ability of the Group's teams to seize value-creating growth opportunities, the Board of Directors reaffirms the priority it gives to the implementation of the Group's long-term industrial strategy. In this context, the Board of Directors wished to give visibility to the policy of allocation of cash flow and return to the shareholder for the next three years. It has confirmed an investment program of $ 15 - $ 17 billion a year, has set a target of maintaining the debt ratio (net debt to capital) below 20% and maintaining a grade A rating and has also proposed the following measures: 1. Dividend increase of 10% over the next 3 years A dividend for 2017 of € 2.48 / share will be proposed to the Shareholders' Meeting, which corresponds to a balance of € 0.62 / share and a dividend increase of 1.2% compared to 2016 The quarterly installments for the 20181 financial year will be increased by 3.2% to € 0.64 per share, with the intention of proposing to the Annual General Meeting a dividend for the 2018 financial year of € 2.56 / share. The dividend target for the 2020 financial year would be € 2.72 / share 2. Redemption of shares issued without a discount under the share dividend option Maintaining the dividend in stock option to meet the wishes of certain shareholders but without discounting the issue price on the share price Repurchase of newly issued shares for cancellation. No dilution linked to the stock dividend option as of 2018 Immediate redemption of the shares issued in January 2018 as part of the payment of the second installment 2017 3. Up to $ 5 billion of share buybacks over the 2018-20 period The goal is to share with shareholders the benefits of rising oil prices Buyback volumes will be adjusted for oil prices This comes in addition to the repurchase of shares issued as part of the stock dividend 2017 dividend The Board of Directors proposes to the Combined General Meeting of Shareholders, to be held on June 1, 2018, to set the dividend for the 2017 financial year at € 2.48 / share, an increase of 1.2% compared to 2016. Given the three installments of € 0.62 / share for the 2017 financial year, a balance of € 0.62 / share is therefore proposed. The Board also proposes that the Shareholders' Meeting decide to offer shareholders the possibility of receiving the payment of this dividend balance for the 2017 financial year, either in cash or by subscribing for new shares of the Company without a discount. Therefore, subject to approval by the General Assembly of the resolution to be proposed: the balance of the dividend will be detached from the share on Euronext Paris on June 11, 2018; the payment in cash and / or the delivery of any shares issued, depending on the option chosen, should take place on June 28, 2018. 1The first deposit will be paid in October 2018 * * * * * Total contacts Investor Relations: +44 (0) 207 719 7962 l ir@total.com
ArcelorMittal (MT.AE) reported its fourth-quarter results before the market opened on Wednesday. Here's what you need to know: SALES: Sales rose by about 25% to $17.71 billion due to higher steel and iron-ore shipments and higher average steel selling prices. The results fell slightly short of a FactSet-compiled consensus of analyst estimates that forecast $17.94 billion. NET INCOME: The steelmaker posted quarterly net profit of $1.04 billion, more than doubling its result from a year ago, propped up by sales performance. The company recorded an income tax benefit of $119 million in the quarter, which compares with a $71 million tax expense in the year-earlier period. MACRO OUTLOOK: ArcelorMittal was upbeat about the steel industry outlook for 2018, saying that the demand environment remains positive and steel spreads remaining healthy. The company estimates global steel demand--measured through apparent steel consumption--to grow between 1.5% and 2.5% in 2018, with Chinese demand flat. CASH FLOW: Net debt decreased this quarter by $1.9 billion to $10.1 billion, mainly due to positive free cash flow. The debt figure at year-end was $0.9 billion lower than on Dec. 31, 2016. ArcelorMittal said that it would continue to prioritize deleveraging--it has a net debt target of $6 billion--but proposed a dividend of $0.10 per share in 2018. Once the debt level falls to or below its target, the company will return a portion of annual free cash flow to shareholders, it said. ILVA: ArcelorMittal said that it will continue "to work closely and constructively" with the European Commission, which has opened a phase II review of its proposed acquisition of Italian steelmaker Ilva. Arcelor's 1.8 billion euros ($2.23 billion) acquisition had become mired in controversy after an EU antitrust investigation ruled that the Italian government must recover around EUR84 million in illegal state aid. Write to Alberto Delclaux at alberto.delclaux@dowjones.com (END) Dow Jones Newswires January 31, 2018 05:27 ET (10:27 GMT)
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Total SA (FP.FR) said Tuesday that its board of directors has removed the discount offered for new shares to be issued as payment of the second interim dividend of the year, a move that sets the price for new shares at 46.55 euros ($54.86). Shareholders have the option to receive the dividend in cash or in new shares of the company, it added. The French energy group said the discount is the result of current oil prices--above $60 a barrel--and its performance in terms of cash-flow generation. The ex-dividend date for the second interim dividend is set for Dec. 19, the company said. Write to Marc Navarro Gonzalez at marc.navarrogonzalez@dowjones.com (END) Dow Jones Newswires December 12, 2017 13:22 ET (18:22 GMT)
BP confirms details of Q3 dividend payment By BFN News | 02:20 PM | Monday 11 December, 2017 Factsheet BP PLC USD0.25 (BP.) On 31 October, BP announced that the interim dividend for the third quarter of 2017 would be $0.10 per ordinary share ($0.60 per ADS). The interim dividend is to be paid on 21 December to shareholders on the register on 10 November. Sterling dividends payable in cash will be converted from US dollars at an average of the market exchange rate over the four dealing days from 5 to 8 December (£1 = $1.34346). Accordingly, the amount of sterling dividend payable in cash on 21 December will be 7.4435p per share. At 2:20pm: (LON:BP.) BP PLC share price was +4.1p at 496.85p Story provided by StockMarketWire.com
Royal Dutch Shell plc Third Quarter 2017 Euro and GBP Equivalent Dividend Payments News provided by Royal Dutch Shell plc 12:59 ET Share this article THE HAGUE, Netherlands, December 7, 2017 /PRNewswire/ -- The Board of Royal Dutch Shell plc ("RDS") (NYSE: RDS.A) (NYSE: RDS.B) today announced the pounds sterling and euro equivalent dividend payments in respect of the third quarter 2017 interim dividend, which was announced on November 2, 2017 at US$0.47 per A ordinary share ("A Share") and B ordinary share ("B Share"). Dividends on A Shares will be paid, by default, in euro at the rate of €0.3985 per A Share. Holders of A Shares who have validly submitted pounds sterling currency elections by December 1, 2017 will be entitled to a dividend of 35.02p per A Share. Dividends on B Shares will be paid, by default, in pounds sterling at the rate of 35.02p per B Share. Holders of B Shares who have validly submitted euro currency elections by December 1, 2017 will be entitled to a dividend of €0.3985 per B Share. This dividend will be payable on December 20, 2017 to those members whose names were on the Register of Members on November 17, 2017. Taxation - cash dividend Cash dividends on A Shares will be subject to the deduction of Dutch dividend withholding tax at the rate of 15%, which may be reduced in certain circumstances. Non-Dutch resident shareholders, depending on their particular circumstances, may be entitled to a full or partial refund of Dutch dividend withholding tax. Expected from 2018, Dutch and non-Dutch resident shareholders who are exempt from corporate income tax may elect for an exemption from Dutch dividend withholding tax instead of requesting a refund if tax was withheld. Furthermore, in April 2016, there were changes to the UK taxation of dividends. The dividend tax credit was abolished, and a new tax free dividend allowance introduced. Dividend income in excess of the allowance is taxable at the following rates: 7.5% within the basic rate band; 32.5% within the higher rate band; and 38.1% on dividend income taxable at the additional rate. If you are uncertain as to the tax treatment of any dividends you should consult your own tax advisor.
BP, Total’s ratings could absorb end of scrip dividends: Fitch December 7, 2017 Company News, Crude Oil, Europe, Natural Gas, News 0 European oil majors BP and Total could be pressured into following Shell’s recent decision to cancel scrip dividends and return to paying its dividend entirely in cash, but such a move is unlikely to negatively impact their debt ratings, Fitch Ratings said Wednesday. Analysts at the credit rating agency said in a note both BP and Total have rating headroom if scrip dividends are ended, at least more headroom at their current rating than Shell did. Fitch has affirmed Shell at "AA-" with a negative outlook after last week’s decision, claiming the plan will slow the firm’s deleveraging, Kallanish Energy learns. If both companies were to completely cancel scrip dividends beginning in 2018, it would “probably take significantly more shareholder-friendly actions, such as very large share buybacks or rising dividends, as well as rising capital intensity, for the ratings of Total and BP to come under significant pressure,” Fitch said. All three oil majors introduced scrip dividend programs when oil prices collapsed in 2014-2015, rather than cut gross dividends, which helped balance cash flows and reduce additional borrowing. The analysts said the recent oil price recovery, along with pressure from shareholders who don’t want their shares diluted, could incentivize oil companies to increase cash distributions by cancelling scrip dividends, launching share buybacks or even raising dividends. Shell saved roughly $11 billion of cash with the program, but reiterated its commitment to buy back at least $25 billion of shares in 2017-2020, subject to a sustained recovery in crude prices and debt reduction. Its reference oil price is $60 a barrel. Fitch analysts, however, see Shell's decision as credit negative “as it will reduce the company's financial flexibility under our base case of oil prices returning to below $55/Bbl in 2018, and refining margins moderating.”
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Oil & Gas Chevron’s $1million-an-hour dividend may go into overdrive Written by Bloomberg - 03/12/2017 12:31 pm Chevron news Chevron Corp. may accelerate dividend growth over the next two years thanks to megaprojects that are already in the budget, according to one of the top-rated analysts following the oil explorer. With earnings from massive Australian liquefied natural gas investments poised to swell cash flow, Chevron probably will have the bandwidth to lift payouts for 2018 and 2019 by more than a five-year annual growth rate of about 5 percent, Cowen & Co.’s Sam Margolin wrote in a note to clients. Fresh off a breakfast meeting with Chevron executives that included CEO-In-Waiting Mike Wirth and longtime CFO Pat Yarrington, Margolin noted that Chevron’s existing capital budget guidance is sufficient to fund the company’s portfolio of crude and gas projects. In addition to the Australian LNG developments, Chevron is in store for a flood of new output and cash flow from the $37 billion expansion of its Tengiz field in Kazakhstan. “Management did note that the business requires investments in new resources periodically,” Margolin wrote. “But there is no current pressure to allocate capital within or above the current guidance budget to support steady production or higher levels of growth before Tengiz comes on.” Wells Fargo Securities LLC analyst Roger Read picked up a similar message from the breakfast. Management “made clear they have heard loud and clear from investors that increasing cash returns to shareholders are a necessary component to keep them confident in Chevron and its prospects,” Read wrote in a note today. Chevron, the world’s third-biggest oil explorer by market value, spends the equivalent of almost $1 million an hour on dividends. Margolin has the equivalent of a “buy” rating on Chevron and is rated the third-best among peers over the past year, according to data compiled by Bloomberg.
Why I’d sell this FTSE 100 shocker to buy this dividend star Royston Wild | Sunday, 26th November, 2017 | More on: BWNG MKS Image: Marks & Spencer. Fair use. Against a toughening trading backdrop Marks & Spencer Group (LSE: MKS) has seen its share price decline 25% from the 2017 peaks above 395p per share printed back in May. And the company’s latest trading update has fed expectations that even more trouble could be around the corner. Transforming its clothing lines has long been a problem amid charges that its ranges are both old-fashioned and expensive, particularly when lined up against what’s found over at the likes of Next and H&M. And Marks & Spencer’s November market update showed that these accusations remain very much alive and well. While revenues have improved over the most recent quarter, the company still endured a 0.7% decline in like-for-like sales for the six months to September. Food failing To add to the its headaches, the allure of its previously-robust Food arm is also declining slightly. Like-for-like sales here dropped 0.1% during April-September, its performance again lagging that of the wider grocery industry. M&S noted noted the detrimental impact of the online home delivery and convenience segments on sales, and the price pressures that are driving customers into the arms of the discounters. The FTSE 100 firm plans to slow the rollout of its Simply Food outlets, and to change its product proposition with a greater focus on value. This is likely to put further stress on already-pressured margins and higher costs and increased promotions in the first half have caused M&S to say Food margins will fall between 75 and 125 basis points in the full year. A bleak outlook Falling demand for its edible items is the last thing Marks & Spencer needed given its ongoing failure to attract fashion shoppers. Chief executive Steve Rowe recently commented: “The business still has many structural issues to tackle as we embark on the next five years of our transformation”; and he is not kidding, the challenging retail environment making it even harder to achieve its much-awaited turnaround. The City is expecting earnings to drop 9% in the year to March 2018, and the likelihood of any bounce-back thereafter is built on pretty sandy foundations, in my opinion. I reckon investors should give the company a wide berth despite its low paper valuation, a forward P/E ratio of 10.8 times. Brown sugar Marks and Sparks’ poor profits outlook, expensive transformation programme and colossal debt pile (net debt stood at £2bn as of September) leave dividends in danger of falling short of forecasts. Analysts are expecting an 18.4p per share reward, creating a jumbo 6.2% yield. Instead, I believe those seeking a cut-price dividend star should take a look at N Brown Group (LSE: BWNG). The FTSE 250 retailer is expected to deliver a 14.22p per share reward, resulting in a monster 5.2% yield. Although the retailer is not immune to the broader pressures washing over the UK high street, its focus on the ‘plus size’ niche segment and under-served 50-plus market puts it in a much stronger position than M&S to ride out the storm and deliver long-term earnings growth. Indeed, sales at its Jacamo and Simply Be fascias increased 6.7% and 21% respectively during March-August. The City is expecting earnings to slip 3% in the 12 months to February, but I am expecting earnings to flip higher thereafter, helped by its increased focus on online retailing. I reckon a forward P/E ratio of 12.4 times makes N Brown worth a serious look today.
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Dutch Shell plc or GlaxoSmithKline plc? Edward Sheldon | Sunday, 26th November, 2017 | More on: GSK RDSB Photo: Royal Dutch Shell. Fair use. Royal Dutch Shell (LSE: RDSB) and GlaxoSmithKline (LSE: GSK) are two of the most popular dividend stocks in the FTSE 100 index. I own both in my own portfolio. However, neither Shell nor Glaxo are perfect dividend stocks, in my view. Both have struggled with profitability in recent years, and as a result, have not increased their payouts. Today, I’m comparing the two companies. Is one a better dividend stock than the other? Dividend yield Beginning the analysis by looking at each company’s yield reveals that GlaxoSmithKline has a higher dividend yield than Shell right now. Shell paid its shareholders $1.88 in dividends last year, a yield of 5.9% at the current share price and exchange rate. Glaxo paid investors 80p per share, a yield of 6.2%. The healthcare giant wins here. Recent dividend growth Examining recent dividend growth, between 2014 and 2016, Shell paid shareholders $1.88, $1.88 and $1.88. No growth was recorded, however, with the pound having fallen against the dollar, UK investors will have enjoyed a rise in the yield. In comparison, Glaxo, which declares its payout in GBP, paid 80p, 80p and 80p in that time. Again, no growth. However, the company did pay a special dividend of 20p per share in 2015. On that basis, I’ll give Glaxo the win in this department too. Dividend cover City analysts expect Shell to generate earnings per share of $2 this year. That gives a dividend coverage ratio of just 1.06 times last year’s payout. In comparison, analysts expect Glaxo’s earnings to come in at 111p. That gives a coverage ratio of 1.39 times last year’s payout. Glaxo has the upper hand here, although neither ratio is strong. Valuation GlaxoSmithKline shares are also cheaper than Shell shares right now. The healthcare specialist sports a forward looking P/E ratio of just 11.8, vs 15.9 for Shell. So far, Glaxo looks to be the better dividend stock. However, I’m not entirely convinced that it is. Dividend outlook The reason I say this is that Shell appears to have momentum at the moment. The oil price is back up to around $60 per barrel, and at that price, Shell can generate decent levels of free cash flow. With the merger of BG Group complete, Shell’s dividend is looking more and more sustainable, assuming the oil price doesn’t crash again. The stock’s 10% gain over the last three months reflects this. In contrast, I’m getting more concerned about the sustainability of Glaxo’s dividend. Free cash flow is low, and with the group looking at potential acquisitions such as that of Pfizer, there could be implications for the payout. When asked recently whether such a deal would carry dividend risk, CEO Emma Walmsley replied: “We confirmed our intentions to pay the dividend in 2017 of 80 pence and again in 2018 and then we will be returning to declaring the dividend quarterly and not giving a more specific outlook beyond that.” Lack of long-term dividend assurance has rattled investors, with the stock falling 15% over the last three months. The market clearly has doubts about the sustainability of GlaxoSmithKline̵7;s dividend. So while Glaxo has the lower valuation, higher yield and better coverage, if I was to pick one dividend stock between the two right now, I’d be inclined to go with Shell. I believe there’s less chance of a dividend cut with Shell, assuming the oil price doesn’t plummet again.
Total: Strong Q3 Performance And Dividend Create Investor Appeal Nov. 17, 2017 12:05 PM ET| About: TOTAL S.A. (TOT) Power Hedge Power Hedge Macro, energy, alternative energy, contrarian (2,236 followers) Summary Total recently reported very solid Q3 2017 results. The company showed both QoQ and YoY improvements in nearly every financial metric. The company recently acquired a stake in one of the largest oil fields in the world and increased its production at Kashagan, giving it much more oil to sell. The company pays a strong dividend and has a history of maintaining or increasing it for the past thirty years. Overall, Total appears to offer quite an appealing opportunity for investment and further research. On Friday, Oct. 27, 2017, integrated French oil and gas supermajor Total SA (TOT) reported its Q3 2017 earnings results. Overall, these results were quite impressive as the company both beat the expectations of its analysts and showed relatively strong improvements year-over-year in nearly all aspects of its business. While this is not necessarily a sign that the oil and gas industry has finally begun to turn the corner, the string of relatively strong reports that we have been seeing recently certainly show that the industry has adapted to the current pricing environment. Total is the latest example of this. As many of my long-time followers are no doubt already aware, it is my usual practice to share the highlights from a company's earnings report before delving into an analysis of those results. This is because these highlights serve to provide background for the remainder of the article and provide a framework for the resultant analysis. Therefore, here are the highlights from Total's third quarter 2017 earnings results: Total achieved an adjusted operating income of $3.062 billion in the third quarter of 2017. This represents an increase over the $2.748 billion and the $2.332 billion that the company reported in the second quarter of 2017 and the third quarter of 2016 respectively. Total achieved an average combined production of 2.581 mboe per day during the third quarter. This represents an approximate production increase of 6% year-over-year. Total managed to achieve an average realized price of $52.10 per produced barrel of Brent crude, representing a 14% year-over-year increase. The company took over as operator of the giant Al-Shaheen field in Qatar and announced the acquisition of Maersk (OTCPK:AMKAF). These two items will serve to increase its growth going forward. Total achieved a reported net income of $2.7 billion in the third quarter of 2017, representing a 29% increase year-over-year. Undoubtedly, one of the items that will most appeal to an investor in Total that is perusing these highlights is that Total's earnings climbed fairly significantly on both a quarter-over-quarter and a year-over-year basis. While one reason for that is that the market price of both oil and natural gas increased over the period, resulting in the company generating more revenue per unit of energy produced. In addition however, Total also managed to grow its production in the latest quarter. There are a few reasons for this. In July 2017, Total completed a multi-year process to obtain a 30% ownership stake in the Al-Shareen oil field, located offshore Qatar. Al-Shareen is one of the largest known oil fields in the world, producing approximately 300,000 barrels of oil per day (roughly 40% of the Qatari total). Thus, Total completing this deal in July 2017 would naturally increase the company's production quarter-over-quarter. In addition, investors will be pleased to note that the company's role in producing at this field is valid for the next 25 years, so Total will continue to generate revenue from this field for quite some time to come. For a number of years, Total was one of several oil companies that was involved in the development of the massive Kashagan oil field located in the Caspian Sea. While this project experienced many troubles over the first decade of its existence, it finally began production on Sept. 11, 2013, although it was expected that it would take several years to expand to full production. Total is one of the companies that has continued to benefit from increasing production from Kashagan to this date and saw a production increase from it in the most recent quarter. It seems likely that Total will continue to see its production from Kashagan grow going forward as the ramp up continues and due to the size of this field, production can continue at the site for a number of years to come. As many investors that follow the industry are already well aware, oil and gas companies the world over have been actively working to reduce their cost structures. This is largely a necessity given that it seems likely that the current oil pricing environment is going to continue for quite some time. Total is no exception to this and has implemented its own cost reduction program to attempt to keep its costs down. According to Chairman and CEO Patrick Pouyanne, commenting on the company's results (see link to results above): Investment discipline continues. Organic investments were $3.1 billion in the third quarter 2017 and $10.0 billion in the first nine months, in line with the target of $14 billion this year, and cost reduction will be more than $3.6 billion, surpassing the target for this year. In effect then, Total reduced its annual costs by $3.6 billion year-over-year while still managing to grow its production. As the oil and gas industry is a very capital-intensive industry, this is certainly an impressive feat and should prove to be quite appealing to investors. While this undoubtedly increased the company's reported profits, it also has the effect of increasing the company's cash flows in the face of the "new normal" oil price environment compared to where they would otherwise be. This provides some support to Total's dividend, which historically is quite appetizing. One thing that has always appealing to investors about Total is the firm's dividend. The company quite often boasts one of the highest dividends in the oil sector, even among its European peers. In the latest quarter, the company was able to maintain this streak, declaring a quarterly dividend of €0.62 ($0.73205) per share. As of the time of writing, Total had a stock price of $55.21 per ADR, giving the company a dividend yield of 5.30%. As is the case with many oil and gas companies, Total has a history of assisting its dividend over time, assisting income-focused investors in keeping their income growing to keep up with inflation. The company has either maintained or increased its dividend for more than 30 years, a track record that is quite similar to its American peers such as Exxon Mobil (XOM) or Chevron (CVX) in this regard. Unfortunately, this has not always translated into a dividend increase for American investors, as shown here: Source: DividendChannel.org Total may actually be one of the better energy companies to own for those investors that desire or require income as it does boast one of the highest dividend yields among its peers. Source: Created by author with source data from Yahoo Finance Please note that, as with many foreign companies, U.S. citizens are often better served by holding their shares of Total in a standard brokerage account as opposed to some form of tax-advantaged vehicle. This is because France imposes a withholding tax on dividends paid by Total. This rate will either be 15% or 30% (typically 15% for individuals) depending on the status of the owner of the shares. Individuals, however, are able to take a credit against their tax returns for this amount, thus reducing their U.S. tax liability but this credit cannot be claimed if a tax-advantaged vehicle holds the shares but the tax will still be paid after the tax-advantaged account receives the dividend. This is the reason why it is recommended to hold your shares outside of your retirement account. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
When Will Royal Dutch Shell Raise Its Dividend? Nov. 16, 2017 4:59 PM ET| 15 comments| About: Royal Dutch Shell plc (RDS.A), RDS.B Aristofanis Papadatos Aristofanis Papadatos Oil & gas, portfolio strategy, value Aristofanis Papadatos (3,118 followers) Summary Royal Dutch Shell has not cut its dividend since World War II. However, the company has paid the same dividend for 15 consecutive quarters. Therefore, the big question is if and when its shareholders should expect the next dividend hike. Royal Dutch Shell (RDS.A) (NYSE:RDS.B) offers a generous dividend yield, which currently stands at 5.9%. Nevertheless, the oil major has paid the same dividend for 15 consecutive quarters. Therefore, as most of its shareholders are holding the stock for its dividend, it is only natural that they wonder if and when they should expect the next dividend hike. First of all, Shell has an enviable record in dividend payments to its shareholders. To be sure, the company has not cut its dividend since World War II. This achievement certainly confirms the exceptional business performance of the company. However, the company has markedly slowed its dividend growth rate during the last decade, as it has raised it by only 2.7% on average during this period. In addition, like the other oil majors, Shell has been pressured to a great extent by the prolonged downturn of the oil market and hence it has frozen its dividend for 15 consecutive quarters. More precisely, the company posted free cash flows of only $3.7 B in 2015 and -$1.5 B last year, which were clearly insufficient to cover the annual dividend payments of about $16 B. Consequently, the net debt (as per Buffett, net debt = total liabilities – cash – receivables), which also increased due to the acquisition of BG, has almost doubled in the last few years, from $87.8 B in 2012 to $150.1 B in the most recent quarter. The steep increase in the debt load has also resulted in doubling the annual interest expense of the company, which currently stands at $3.0 B. Therefore, the company has to reduce its debt load in order to reduce its leverage and its exposure to any unforeseen headwinds. On the other hand, the company has taken the right measures during the ongoing downturn in its sector and hence it now seems to have left the worse behind. More precisely, it has reduced its operating expenses by approximately 25% during the last three years while it has also curtailed its capital expenses by 1/3. As a result, it has managed to achieve free cash flows of $16.8 B in the last 4 quarters, which are sufficient to fund the dividend payments. In other words, the company has managed to fully cover its dividend at an average oil price of $51. This achievement only confirms that the company has taken the right steps to withstand the environment of low oil prices. It is also remarkable that Shell has surpassed Exxon Mobil (XOM) in operating cash flows so far this year for the first time in about two decades. While all the oil majors have enjoyed strong support from their refining segments during the current downturn, Shell has found additional support from its chemical segment. More specifically, while the price of oil is now half of what it was in 2014, the earnings of the chemical segment of the company have doubled, from $1.3 B to $2.6 B in the trailing four quarters. Therefore, this segment provides additional diversification to Shell under the prevailing low oil prices. It is also worth noting that the management of Shell does not focus merely on the short-term results, like most managements. Instead it maintains a long-term horizon. This is clearly reflected in the recent acquisition of NewMotion, the owner of one of Europe’s largest electric vehicle charging networks. While the current scale of electric vehicles is negligible for an oil major, the management of Shell made this acquisition thanks to its expectations for electric vehicles to comprise about a quarter of the global car fleet by 2040. It is certainly encouraging that the management has such a broad horizon and tries to make the right moves well in advance to position the company before other large companies enter the market. It is also important to note that the oil major is fine grading its upstream segment in order to be appropriately positioned to benefit from the next upcycle. More specifically, while this segment used to generate the vast majority of the total earnings of the company in the past, it is now only marginally profitable and makes up just 15% of the total earnings. Nevertheless, the management maintains a long-term scope and has thus invested in several blocks in Brazil’s offshore oil sector. In fact, the company secured half of the blocks offered in the tender. More importantly, the management believes that these blocks will prove profitable even at oil prices below $40. Therefore, while the company is disposing non-core assets to preserve its balance sheet, it is also investing in projects with really promising returns. In reference to the prospects of a dividend hike, although the managements of the other oil majors have emphasized that their top priority is the dividend, the management of Shell has repeatedly stated that its top priority is the reduction of the debt load. Therefore, the management is not likely to raise the dividend for a few more quarters, particularly in the next quarter, when the company expects somewhat lower earnings due to extensive maintenance. On the other hand, if the price of oil does not fall below $50 for a long period, the company will certainly start to reduce its debt load. Despite the booming shale oil output, the oil market is better balanced now than it was three years ago thanks to the drastic cuts of capital expenses of all the oil producers during this downturn. These cuts will soon start to take their toll on the total supply. Moreover, while the shale oil producers are likely to put a cap on any rally of the oil price, Saudi Arabia will do its best to support the oil price amid the upcoming IPO of Saudi Aramco next year. Therefore, while oil is not likely to return to the $100 level anytime soon, it is likely to remain around $50-$70 for the next few years. Such a range will certainly help Shell improve its balance sheet. In addition, as soon as the company becomes confident that the oil price will not plunge to $40s once again, it is likely to raise its dividend. Therefore, its shareholders can reasonably expect the next dividend hike to be announced during the second half of next year. To sum up, Shell has taken the right steps in the ongoing downturn of the oil market and thus seems to have left the worse behind. As a result, the oil giant can fully cover its dividend at the prevailing oil prices. Therefore, as the oil market has become more balanced and the oil price is not likely to plunge to low $40s anytime soon, the company will be able to start reducing its debt load and will then be able to raise its dividend, probably in the second half of next year. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
the grumpy old men
Shares buy backs at oil giant follow cost cutting drive which has taken toll on jobs in Aberdeen BP to return billions more to investors after surge in profits BP to return billions more to investors after surge in profits 0 comments BP has launched a programme to return around $1.6 billion (£1.2bn) more cash to shareholders a year, after slashing costs in response to the crude price plunge and the Gulf of Mexico oil spill, writes Mark Williamson. The oil and gas giant has become the first major to restart share buy backs since 2014, when the industry entered a deep downturn after the oil price fell sharply. BP has shed around 900 jobs in the North Sea and sold off a range of what it deemed non-core assets in the area since 2014. The company said last month it was planning to resume buy backs after third quarter profits doubled to $1.9bn. Chief executive Bob Dudley thinks BP has been put in shape to prosper if oil sells at $50 per barrel, compared with around $61.90/bbl yesterday. BP noted its authority to buy back shares took effect yesterday. It will remain in place until the 2018 annual general meeting. The company will decide when to buy shares according to market conditions. The buy backs will be used to offset the effect of paying around 20 per cent of its dividends in shares. BP shares closed down 8p at 495p. They hit a two year high of 525p last week. The cost of the 2010 spill off the US rose $0.2bn to $63.4bn in the third quarter.
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