Delving into the Dividend Details of Shell PLC
Shell PLC (SHEL, Financial) recently announced a dividend of $0.66 per share, payable on 2023-12-20, with the ex-dividend date set for 2023-11-16. 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 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 refinaries, 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 3.47% and a 12-month forward dividend yield of 4.00%. 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 -16.90%. Extended to a five-year horizon, this rate increased to -16.00% per year. And over the past decade, Shell PLC's annual dividends per share growth rate stands at -4.40%. 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 1.45%.
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 2023-09-30, Shell PLC's dividend payout ratio is 0.27.
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 2023-09-30, suggesting fair profitability. The company has reported net profit in 9 years out of 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 9.20% per year on average, a rate that underperforms than approximately 53.46% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Shell PLC's earnings increased by approximately 51.10% per year on average, a rate that underperforms than approximately 24.1% of global competitors.
Concluding Insights on Shell PLC's Dividends
After examining Shell PLC's dividend payments, growth rate, payout ratio, profitability, and growth metrics, investors can gauge the company's potential for long-term dividend sustainability. While historical dividend reductions and a negative growth rate may raise concerns, the company's solid profitability and reasonable payout ratio suggest that it has the capacity to maintain its dividends. Moreover, the forward dividend yield indicates potential for dividend growth. Investors should continue to monitor Shell PLC's performance, particularly in the dynamic energy sector, to ensure that future dividends align with their investment objectives. 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.
