Assessing the Future of Shell PLC's Dividend Payments
Shell PLC (SHEL, Financial) recently announced a dividend of $0.69 per share, payable on 2024-03-25, with the ex-dividend date set for 2024-02-15. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Shell PLC's dividend performance and assess its sustainability.
What Does Shell PLC Do?
Shell PLC is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2022, it produced 1.5 million barrels of liquids and 7.9 billion cubic feet of natural gas per day. At year-end 2022, reserves stood at 9.4 billion barrels of oil equivalent, 50% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America. The company operates refineries with capacity of 1.7 mmb/d located in the Americas, Asia, Africa, and Europe and sells 12 million tons per year of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America.
A Glimpse at Shell PLC's Dividend History
Shell PLC has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Shell PLC's Dividend Yield and Growth
As of today, Shell PLC currently has a 12-month trailing dividend yield of 3.91% and a 12-month forward dividend yield of 4.36%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Shell PLC's annual dividend growth rate was 11.50%. Extended to a five-year horizon, this rate decreased to -10.50% per year. And over the past decade, Shell PLC's annual dividends per share growth rate stands at -5.00%.
Based on Shell PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Shell PLC stock as of today is approximately 2.25%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Shell PLC's dividend payout ratio is 0.36.
Shell PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Shell PLC's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Shell PLC's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Shell PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Shell PLC's revenue has increased by approximately 28.80% per year on average, a rate that outperforms approximately 80.75% of global competitors.
Investor Considerations for Shell PLC's Dividend Future
Considering Shell PLC's consistent dividend payments, its recent history of dividend growth, and a prudent payout ratio, the company presents itself as an attractive prospect for value investors focused on income generation. The solid profitability rank and the positive outlook on growth metrics further reinforce the potential for sustained dividend payments. However, investors should remain mindful of the volatility within the energy sector and the impact of global economic changes on Shell PLC. With these factors in mind, value investors may find Shell PLC a compelling addition to a dividend-focused portfolio. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
