Dividend raise: Royal Dutch Shell (+40%)

Last year Royal Dutch Shell (RDS) slashed their dividend with 66%. This was an unprecedented move for the company but I guess they didn't have any other option. Oil prices were low already due to the geopolitical struggles between big oil producing countries. Then COVID-19 entered our world which lowered demand drastically. This perfect storm (or black swan) was just too much.

However since 2020 the price of oil has risen from $20 to about $70. RDS raised their dividend earlier this year with about 4%. Their recent earnings report showed a lot of positive signs. Adjusted Earnings for the quarter were $5.5 billion and cash flow from operating activities for the second quarter 2021 was $12.6 billion. According to their press release: "At the end of the second quarter 2021, net debt was $65.7 billion, compared with $71.3 billion at the end of the first quarter 2021, mainly driven by free cash flow generation in the quarter. Gearing was 27.7% at the end of the second quarter 2021, compared with 29.9% at the end of the first quarter 2021, mainly driven by net debt reduction and improved earnings.".

Finally Royal Dutch Shell decided to increase their shareholder distribution with almost 40% to $0.24 per share. This raise adds about € 30 to my annual dividend income (before tax). All of the 2021 dividend raises combined result in an increase of €110 to my annual dividend income. Awesome! 

Recent dividend increases

Back in February I wrote about various dividend increases. The pace continues in the last weeks with different raises! Of course I am happy with these raises, especially after a somewhat sobering 2020 in terms of dividend growth. So let's take a look at the raises.

Realty Income

On March 16th Realty Income (NYSE:O) declared a $0.235/share monthly dividend, which is a 0.2% increase from its prior dividend of $0.2345. I received 15 dividend raises since my purchase of O back in 2018. The annual dividend growth rate is just over 2%. It's not mindblowing. My return on investment is currently around 12% per annum so I am not complaining either.

Johnson & Johnson

On April 20th Johnson & Johnson (NYSE:JNJ) declared a $1.06/share quarterly dividend, which is a 5% increase from its prior dividend of $1.01. I received two dividend raises since my purchase of JNJ back in 2019. I guess my expectations with regards to the dividend growth rate were met, albeit slightly on the lower end. We'll see what happens next year with the dividend!

Kinder Morgan

On April 21th Kinder Morgan (NYSE:KMI) declared a $0.27/share quarterly dividend, which is a 2.9% increase from its prior dividend of $0.26. Since the infamous dividend cut back in early 2016, the dividend has more than doubled. However the return on my investment is still negative, around -5% on an annual basis. For now I just plan to hold and collect my dividends.

International Business Machines Corporation

On April 27th IBM (NYSE:IBM) declared a $1.64/share quarterly dividend, which is a 0.6% increase from its prior dividend of $1.63. I received seven dividend raises since my purchase of IBM back in 2014. The annual dividend growth rate is just over 6%. I guess I am disappointed with the performance of IBM which moved nowhere in the last 8 years. For now I plan to hold onto this position.

Royal Dutch Shell

On April 29th Shell (NYSE:RDS.A) declared a $0.347/ADS quarterly dividend, which is a 4.2% increase from its prior dividend of $0.333. Since the infamous dividend cut back in 2020, the dividend has risen slightly in $-terms, however because of the decline in the EUR.USD-rate it's basically steady. The return on my investment is still negative, around -2% on an annual basis. For now I just plan to hold and collect my dividends.

Baxter

On May 3th Baxter (NYSE:BAX) declared a $0.28/share quarterly dividend, which is a 14.3% increase from its prior dividend of $0.245. I received several dividend raises since my purchase of BAX back in 2013. The dividend was reduced after the Baxalta spin-off in 2015. After that moment BAX returned to a high dividend growth. And based on my return on investment (around 15% on constant FX-rate) I am quite satisfied! We'll see what happens next year with the dividend.

Summary

Together these raises increased my forward annual dividend income by roughly €7. 

Based on my portfolio's dividend yield of 3,7% I have to invest € 190 to get this kind of dividend income, but now I get it for free! Rock on!

Recent buy: Royal Dutch Shell

Last week I've purchased another batch of shares. 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 40 shares to my current position of Royal Dutch Shell for €20.50 per share. This is the lowest price I paid in all of my RDS purchases in 6 years.

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.
• Management seems to be doing a good job with unloading assets at times with higher oil prices and buying back shares when prices are low. 
• 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 8% looks awesome! 
• I wanted to strengthen my EURO-denominated part of the portfolio. About 75% of my stock portfolio is listed in US dollars. I am not too uncomfortable with that right now, but it still provided me with an extra argument to purchase RDS.

I now own 150 shares of RDS. These new 40 shares add roughly €67 to my annual forward dividend income which now stands at €1.813.

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

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?

Recent buy: Royal Dutch Shell

The last month I've blogged several times about my wish to diversify in European companies to reduce my exposure to changing EUR.USD-rates. However, it is more important to buy companies with great quality, sound business fundamentals and with a lasting commitment to shareholders. I think I've combined these traits in my purchase of Royal Dutch Shell.

European Dividend Contenders And Better

Most if not all the Dividend Growth Investors (DGI) on Seeking Alpha have used the so called CCC-list, maintained by David Fish. On this list are companies which have increased their dividend payout for at least 5 years (challengers), 10 years (contenders) or 25+ years (champions). Even though these companies are American based, a lot of these companies on this list have global exposure. However, in any case, they are still listed on American stock exchanges, valued in American dollars and also pay regular dividends in American dollars. For someone based in other areas of the world (in this case Europe), this poses a risk due to changes in the EUR.USD-rate.