On Thursday 15th January 2015, I extended my position in Royal Dutch Shell B and bought 56 shares. The share price at the time of purchase was 2,115p. The total cost with charges included was £1,202.27.
Their average yield over the last 5 years has been 5.24%. The share price is currently valued at 5.17%.
The dividend payments increased every year from 1995 to 2009. RDSB then held their dividends for three years (no increase or decrease). In 2012 they started increasing the dividends once again and they've increased them every year since. Over the last 5 years the average dividend growth rate was 2.4%. RDSB pay dividends each quarter, if their 4th and final payment is in line with the first three, the dividend would increase 4.44% from last year.
Their average dividend cover is 1.9 over the last 5 years, and for the last financial year, the dividends were covered by 1.48.
The 52 week high was back in April 2014, when it topped out at 2,613p. This point is 23.5% higher than it was at my purchase price. I extended my position in RDSB for it's stable and above average dividend yield more than it's capital growth potential. When I look back at it's 5 and 10 year share price history, I was surprised how stable the price had performed over time. 10 years ago the price was at 1,562p per share, which is a 35% increase. Nothing special!
With that said, the oil/energy sector have suffered a significant drop in prices over the last 6 months, and I believe that with RDSB I can benefit from long, stable dividends and some capital growth for many years to come.
Why not invest in BP?
I already have a larger holding in BP over RDSB (twice as much). BP received a boost this week when they heard their fine was going to be significantly lower than they had planned for. There's a strong argument to suggest BP has more potential right now, especially on the capital growth front. I wouldn't argue it either. I want to ensure my portfolio is well diversified and spreading my investments across two major players in the oil/gas industry I believe I'm doing just that.
What do you think of RDSB? Are you investing in the oil/gas companies right now? or are you waiting for the prices to stabilise?
Labels: Stock Purchase