ii view: Shell improves shareholder returns

Despite cutting its payout during the pandemic, this FTSE 100 giant recently upped its dividend by 15%. We assess prospects. 

Full-year result to 31 December

• Profits of $41.6 billion (£34.5 billion), up from $17.5 billion last year
• Dividend up 15% from the previous quarter to $0.2875 per share
• Net debt of $44.8 billion (£37.2 billion), down from $52.6 billion

Chief executive Wael Sawan said:

"Our results in Q4 and across the full year demonstrate the strength of Shell's differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world. We believe that Shell is well positioned to be the trusted partner through the energy transition. As we continue to put our Powering Progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance. We intend to remain disciplined while delivering compelling shareholder returns, as demonstrated by the 15% dividend increase and the $4 billion share buyback programme announced today."

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ii round-up:

Formerly Royal Dutch Shell, and having moved headquarters to the UK, Shell (LSE:SHEL) remains one of the world's major energy companies. 

Its operations span from exploration and production, refining and marketing, to petrochemicals. 

Following its 2015 takeover of BG Group, it has significant Liquefied Natural Gas (LNG) operations.

For a round-up of these latest results announced on 2 February, please click here. 

ii view:

Founded in 1907, Shell today employs over 80,000 people across more than 70 countries. It serves more than 30 million customers at more than 45,000 retail service stations every day. Like rivals such as BP (LSE:BP.) and TotalEnergies SE (EURONEXT:TTE) and under government climate change policy, Shell is investing in renewables production such as wind power and energy solutions in the form of hydrogen and biofuels. 

For investors, the uncertain economic outlook and possible recession continue to raise questions over expected global future energy demand. Soaring consumer energy bills have seen governments increase their tax demands on the sector, too, while tackling climate change issues remains a pressing need for both the industry and governments alike.

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On the upside, Shell's diversity of operations across oil, gas and alternatives means an area of strength typically counters any weakness. China’s emergence from the Covid pandemic is a clear boost, while elevated energy prices have pushed group cashflow higher, allowing the company to reduce debt and raise shareholder returns in the form of both dividends and share buybacks. 

For now, and with the shares sat on an estimated future dividend yield of close to 4% and a consensus analyst estimate of fair value at over £29 per share, Shell will remain a popular play on the oil sector. 

Positives: 

• Diversity of operations
• A focus on shareholder returns

Negatives:

• Uncertain economic outlook
• The weather can raise operational challenges

The average rating of stock market analysts:

Buy