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Shell Has the Best Yield, Lower Valuation, and Better Growth

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Shell’s dividend yield

Royal Dutch Shell (RDS.A) occupies the top position among the six integrated energy stocks being discussed in this series. The company has the second-largest market cap of $256 billion among the six stocks.

Shell has a current dividend yield of 6.0%. In the current quarter, Shell will pay a dividend of $0.94 per share. Shell has paid dividends consistently over the past three years. The dividends have been stable during this period. Three years ago, Shell made a quarterly dividend payment of $0.94 per share. In the past three years, Shell’s stock price has risen 28%.

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Valuations

Shell trades at a forward PE ratio of 11.4x, which is below the average forward PE ratio of 14.1x. Shell trades at 5.0x the forward EV-to-EBITDA multiple, which is below the peer average of 5.8x.

Shell has sound financials. Shell’s total debt-to-total capital ratio was below the industry average in 2018, which points to a favorable scenario. The company had a cash flow surplus in 2018.

Shell has a strong upstream portfolio. The company has a series of upstream projects that are expected to bring production growth. Read Shell Strengthened Last Year: Where’s It Headed? to learn more. Analysts expect Shell’s earnings to rise 2% in 2019, which is better than the average expected fall of 6% among its peers.

Like Shell, BP (BP) and Total (TOT) also have higher dividend yields and lower PE ratios. BP and Total’s forward PE ratios are 12.0x and 10.5x, respectively.

Next, we’ll discuss BP.

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