Shell Tops the List with the Highest Dividend Yield


Dec. 21 2018, Published 3:29 p.m. ET

Shell’s dividend yield

Royal Dutch Shell (RDS.A) occupies the top spot among the six integrated energy stocks under review in this series. The company has the second-largest market cap at $239 billion.

Shell has a current dividend yield of 6.6%. In the current quarter, it’s paid a dividend of $0.94 per share (or American depositary receipt). Shell has paid dividends consistently for the past three years. In fact, its dividend has remained stable during the period. Three years ago, Shell also made a quarterly dividend payment of $0.94 per share. In the past three years, Shell’s stock price has risen 24%.

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Shell is trading at a forward PE multiple of 9.2x, below the peer average forward PE of 11.0x. Shell’s forward PE is the lowest among the stocks discussed in this series. It’s trading at a forward EV-to-EBITDA (enterprise value-to-EBITDA) multiple of 4.5x, again below the peer average of 4.8x.

Shell’s lower valuations are likely the result of its relatively low growth prospects. Analysts expect its earnings to rise 29% in 2018, below the peer average of 69%.

However, Shell’s financials have improved. Shell’s total debt-to-total capital ratio stood below the industry average in the third quarter, pointing to a favorable scenario. The company also observed a cash flow surplus in the first nine months of 2018. Moreover, it has a robust upstream portfolio. The company has a series of upstream projects expected to bring production growth in 2018–2019. For more on Shell, read Here’s How Shell Is Working to Strengthen Its Financials.

Like Shell, BP (BP) and Total (TOT) also have higher dividend yields and lower PE multiples. BP’s and Total’s forward PEs stand at 10.4x and 9.3x, respectively.

Move onto the next article to learn about BP, which occupies the second spot among the six integrated energy companies under review.


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