Thursday, January 8, 2015

Recent buy: RDS

Yesterday I've purchased my first shares in 2015! It was finally time for me to pounce on the recent weakness in oil stocks. Currently I have three oil related stocks in my portfolio: Exxon Mobil, Kinder Morgan and Royal Dutch Shell. I decided to add 37 shares to my current position of Royal Dutch Shell for 26.77 per share. This is slightly more than I paid last year in my first purchase of RDS.

My reasoning is as follows:

  • Shell is a fundamentally sound company and also important: it's an integrated energy company. Lower oil prices are obviously bad for upstream business (exploration and production) but margins for downstream operations (refineries) are increasing.
  • Shell unloaded lots of assets earlier this year (roughly $10 bn) when oil prices were high. Great job by management!
  • Shell bought back shares recently when prices were low. Again, great job by management!
  • Oil prices will fluctuate. They have so done in the past and will do so in the future. I still see future potential in the oil business (like for 20-30 years or so) before alternatives are economically feasible and provide enough (and stable!) energy. The world's population is growing to 9 billion people and these people need energy. Shell can and will provide these needs.
  • The dividend yield of 6% looks awesome!
  • I wanted to add to this existing position to take advantage of the DRIP possibility (if that still exists). Usually I would get the opportunity to reinvest my dividend in stock IF the amount would be able to purchase at least 1 share. My former quarterly dividend was not enough to purchase 1 share of RDS: my current quarterly dividend definitely is.
  • I wanted to strengthen my EURO-denominated part of the portfolio. Even though the US dollar is getting more expensive, over 80% of my stock portfolio is listed in US dollars. I am not too uncomfortable with that right now, but it still provided me an extra argument in purchasing RDS.
So, these new 37 shares add roughly 60 to my annual forward dividend income which now stands at 866! To put my recent progress into perspective: I expected to earn around €850 in annual dividends in my 4th year of DGI. Right now I can expect this amount of money after just 2.5 years of DGI which means I am more than 1.5 year ahead of my income goals so far. It feels great!

What do you think of my purchase? And my reasoning?


  1. Good stuff, Robin. I have been keeping an eye on RDS as well...would love to add it to my portfolio. That dividend yield looks very attractive.


  2. I see only good reasons for this purchase! I own RDS.A myself for many years now and just received my DRIP shares in december, always feels great to automatically increase a position without adding capital.

    1. Thanks for your comment Robert! It's good to hear from a fellow Dutchie and a fellow RDW shareholder. From next quarter onwards I'll be receiving new shares, it's a great feeling!