Shell: A Royal Play on Energy
06/14/2016 7:00 am EST
I’m going to add a blue-chip-integrated oil giant to our Conservative High-Yield Portfolio, asserts growth and income expert Bryan Perry, editor Cash Machine.
Royal Dutch Shell (RDS.A) has made big headlines while leading the sector higher.
The firm announced it cut its capital spending further and plans to shutter operations in several nations to reduce costs and boost returns for shareholders.
Shell lowered its 2016 capital spending to $29 billion, down from an original estimate of $35 billion, its third spending-reduction announcement.
The company will cut operations in up to 10 countries out of the more than 70 countries where it currently has operations, as it plans to focus efforts in 13 countries, including the United States, Brazil and Australia.
“Our portfolio is probably more diverse and spread around the world, and in some parts more mature, than we would like it to be,” Chief Financial Officer Simon Henry recently told Reuters.
Shell will sell $30 billion in assets during the next two years. Chief Executive Ben van Beurden said the cost-saving measures, including cutting 12,500 jobs, will help Shell produce double-digit percentage returns for shareholders by the end of the decade.
The previously announced job cuts come as Shell integrates its BG Group purchase from last year.
This is not only good news for shareholders of Shell, it’s very good news for the dividend and the company’s commitment to maintain it.
Currently, shares of Shell yield 7.60%, and we’ll take that to the bank. Buy RDS.A under $53.
By Bryan Perry, Editor Cash Machine