A Frank Discussion On Royal Dutch Shell’s Dividend
SeekingAlpha.com article published 13 April 2015
A Frank Discussion On Royal Dutch Shell’s Dividend
Summary
- Before the BG acquisition, Royal Dutch Shell had a dividend payout ratio of 90% for 2015.
- The acquisition of BG Group will put Shell on the hook for $15 billion in annual dividends as BG shareholders will own 19% of the company.
- Royal Dutch Shell has built up a large cash position and indicated a desire to maintain the current dividend for the rest of 2015, making no dividend promises thereafter.
Before Shell (NYSE:RDS.B) announced an intention to purchase BG Group (OTCQX:BRGYY), the downtick in oil prices had created a very thin gap between the company’s dividend payout obligations and annual profits. Shell is on the hook for paying $11.8 billion in annual dividends to shareholders. For most of the past five years, this high dividend payout wasn’t an issue — Shell made well over $20 billion in profits annually between 2010 and 2012, so the current payout wouldn’t have even consumed half of the profits.
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