Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Shell signals return to pure cash dividend, focus on renewables

Stock MarketsNov 28, 2017 05:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A Shell logo is seen reflected in a car's side mirror at a petrol station in west London

By Ron Bousso

LONDON (Reuters) - Royal Dutch Shell (L:RDSa) will return to paying pure cash dividends and step up its investment in cleaner energy as it turns a corner after more than two years of cost cuts and disposals prompted by weak oil prices.

Shell Chief Executive Officer Ben van Beurden sought to strike a balance between reassuring investors it can increase returns in its core fossil fuel business during an "era of volatility" in oil prices while preparing to step up investments in renewables.

The Anglo-Dutch company said it will abolish its scrip dividend, through which investors can opt to receive dividends in shares or cash, in the fourth quarter of 2017.

The scheme was introduced in early 2015 to help preserve cash after oil prices fell by more than half from over $100 a barrel and the company bought BG Group in a $54 billion deal.

Shell's shares were trading 2.8 percent higher at 1020 GMT, compared with a 1.1 percent increase in the broader European energy index (SXEP).

BP (L:BP) had pipped its rivals when announcing last month that it would resume share buybacks in the fourth quarter in order to offset the dilutive effect of the scrip dividend. Norway's Statoil (OL:STL) has also eliminated its scrip dividend.

Simon Gergel, UK Chief Investment Officer at Allianz (DE:ALVG) Global Investors welcomed the removal of scrip dividend "which reflects their improving cash generation profile."


With lower debt, oil prices above $60 a barrel and progress in asset sales, pressure has mounted on Shell to remove the scrip and launch a share buyback program.

Shell's dividend payouts in the 12 months to September amounted to $15 billion, with scrip accounting for around a quarter.

In a strategy update, the company reiterated its plans to buy back $25 billion of shares between 2017 and 2020 in order to offset the dilutive effect of the scrip and its acquisition of BG Group. It did not specify a time to start the program.

Shell also raised its cash flow outlook to $30 billion from $25 billion by 2020, assuming an oil price of $60 a barrel.

Shell was able to sharply increase revenue in recent quarters thanks to deep cost cuts, thousands of layoffs and asset sales, adapting its operations to make profit at oil prices of $50 a barrel and to cover its dividend payouts.


Shell, which has bet largely on a growing demand for natural gas in the transition to cleaner energy, also set out ambitious targets to reduce its carbon footprint.

It raised planned investment in its new energies division which focuses on renewables and low carbon technologies to $1-2 billion until 2020 from the current $1 billion.

"We have to start somewhere and we have to build a platform that can participate and grow actively in further electrifying the world," van Beurden told reporters.

The company, which has made a number of investments in electric vehicle technology in recent months, said it will aim to reduce emissions of greenhouse gases by 20 percent by 2035 and by half in 2050.

The targets will be expanded to include all of Shell's operations as well as emissions from products consumed by consumers which Shell has so far resisted, van Beurden said.

The new energies division is planned to be one of Shell's main growth engines after 2020 and generate returns of 8 to 9 percent, Chief Financial Officer Jessica Uhl said.


Shell said that its vast $30 billion asset disposal program, aimed at reducing debt following the BG Group deal, was nearly achieved one year ahead of target, with $23 billion completed, $2 billion announced and another $5 billion at an advanced stage of progress.

The company will continue divestments at a rate of $5 billion per year once the target is reached until at least 2020.

As a result of the divestments and cost savings, the company's target of reducing its debt-to-equity ratio to 20 percent was "in sight". It stood at 25.4 percent at the end of September.

Shell maintained its capital expenditure forecasts at $25 billion to $30 billion per year until the end of the decade.

Shell signals return to pure cash dividend, focus on renewables

Related Articles

Israel stocks lower at close of trade; TA 35 down 0.04%
Israel stocks lower at close of trade; TA 35 down 0.04% By - Oct 17, 2021 – Israel stocks were lower after the close on Sunday, as losses in the Communication, Biomed and Real Estate sectors led shares lower. At the close in Tel Aviv, the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email