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Shell

Shell PLC (FTSE 100 – SHEL) Global formally known as Royal Dutch Shell is a well known business and has been operating for over 185 years. From the humble beginnings back in 1833 in an antiques shop based in London to one of the largest global energy companies today, Shell is both innovative and successful. There is a saying in the financial world: “Never sell Shell” as it is renowned for its quality business and historical dividends being one of the largest FTSE 100 companies.

The business is caught in the modern times and is at the start of a new cycle in its history transitioning from and old oil business into and new energy business. Seeking new investments in low carbon energy production which include liquified gas or natural gas, that has a lower carbon output than traditional coal when generating electricity. This integrated gas business Shell operates is one of the largest in the world, it will help us all as we transition from dirty goal by using LNG as a transitioning fuel, helping generate cleaner electricity and lowering carbon emissions. There is the low carbon commitment and focus on renewables like wind, solar, hydrogen and Carbon Capture projects through the new Shell Energy business set up in 2016.

We all watch the news and read about the climate emergency and I agree however there is still a need for fuel for our transport be it, cars, public transport or the lorries for the distribution of all the goods we consume in the world. The world still requires energy and power and all us consumers use it, whether we admit it or not. Therefore I see a continued case for Shell remaining within the SIPP as it pays a dividend and is making the transitional steps to a greener future.

Part of my investment thesis is to ensure part of my portfolio is sustainable and Shell can be part of that as for the reasons above. A vast amount of money generated from traditional fuels is already being diverted to new investments in green technologies and this will only increase over time, leaving Shell with a portfolio of green investments for greener power generation. The same is happening with other oil majors as they are all seeking ways to transform their businesses to a new low carbon future. The sheer amount of funds available will see these businesses in 80 years from now generating 80% of their energy from renewables and just 20% (if that) from old oil investments. This is why I am still invested in shell as well as two other 100% wind & solar renewable businesses you will find on this website. (Click her for Shells wind projects).

Hydrogen is going to be a fuel of the future and Shell has already over 50 stations around the world delivering Hydrogen: UK, Netherlands, Canada & China. From the production to distribution Shell is making investments in hydrogen and if you are interested further in the projects click here.

Shell can also be seen a diversified stock as it has operations in over 80 countries. There is a recent focus on supplying retail customers through its forecourts.

1, Shell made its first investment into wind over 20 years ago off shore in UK waters and in the USA on land totalling 6 Giggawatts (GW)

2, Shell has three major carbon capture projects in Canada, Australia & Norway

3, Shell has started production and distribution of Hydrogen in Germany, Netherlands & US Markets

4, Shell’s established oil and gas revenues will only help drive the business transition

5, Shell is a well known for its quarterly dividend income with institutional investors

6, Shell is the first equity in the portfolio to achieve dividends in excess of £5,000+

Operationally the entire sector has been come more cash disciplined of late, there been a emphasis of increasing dividends and share buy backs among the major players.

The divestiture of the utilities business to Octopus Energy 2023 completed in the final quarter of 2023 as this segment was not deemed to be very profitable due to the government regulations and complexities surrounding price caps.

In June 2023 Shell announced shareholder distributions will be increased from free cash flow between 30-40%. The next quarterly dividend will increase by 15%.

The latest quarterly dividend was $0.3440 cents that was paid on 25/03/24

P/E of 8.32 on (25/03/24)

Dividend Yield 3.70% (25/03/24)

Total dividend income received over a 7+ year period totals £5,041.29 

Further dividend analysis can be found in the file below:

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