Wednesday, August 11, 2021

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! 

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