Stock Purchase: Royal Dutch Shell B

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?

0 Comments

  • My Dividend Pipeline

    Reply Reply 18th January 2015

    FFF,

    Very nice pick up of Shell. Like you I am a bit overinvested in BP so I like the idea of adding to Shell, Chevron, and Exxon to balance things out a bit.

    Keep up the good work!

    MDP

  • No More Waffles

    Reply Reply 18th January 2015

    Huw,

    Great purchase! I wish I had some free capital a couple of days ago because RDS took a pretty big hit again.

    I wonder where the bottom for many of these companies is in terms of price. Even though the value of my dividend stocks doesn't matter too much, it's nice to buy into a company at an attractive and/or high yield. It's like you said: more than capital appreciation, it's the dividends from giants like Shell that make the bulk of return.

    Cheers,
    NMW

  • Hi Huw

    Great minds think alike. I already had a full helping of RDSB so I grabbed a chunk of BP on Tuesday. The BP purchase brings my High Yield Portfolio share count to 13.

    Cheers
    RIT

  • Huw Davies

    Reply Reply 18th January 2015

    Hi RIT,

    Yes, great minds! I don't want to overdue it on the mining/gas/oil/energy companies but I certainly want a slice of the action. There are some excellent yields from huge companies currently on offer.

    Congratulations from your end. I'm sure we're both smiling from these purchases in 5+ years.

    Many thanks
    Huw

  • Huw Davies

    Reply Reply 18th January 2015

    Thanks NMW.

    They're a massive company with regular large dividends. They were also one of my first purchases when I started DGI. There's always the possibility that the price will drop further but I'm prepared to take that risk at the moment. I think I will gain from the capital appreciation in time, but Shells dividends are very good and have been for some time.

    All the best!
    Huw

  • Huw Davies

    Reply Reply 18th January 2015

    Hi MDP,

    Thank you very much. I'm pleased with it! There are a few huge companies on sale at a great price right now. Like I said above, there's always the chance they could drop further, but that id the case for all companies. Thanks for stopping by!

    Cheers
    Huw

  • UK Value Investor

    Reply Reply 18th January 2015

    Hi Huw,

    I hold BP and will probably sell if the shares increase by double digits in the next year or so. I also sold my shares in Shell back in August for a decent short-term profit, although I might buy again if they keep dropping.

    I think both are reasonable investments at the right price, although Shell has the better track record (not surprising given BP's deep water disaster).

    Like your blog by the way,

    John

  • Huw Davies

    Reply Reply 18th January 2015

    Hi John,

    Thank you for stopping by and leaving a comment. I'm a big fan your website and your columns. It's reassuring to hear a positive comment about my purchase from an investor I respect.

    I think Shell are a slightly more conservative investment due to the Oil Spill, but I also believe they present a better opportunity for capital gains.

    Thank you again!
    Huw

  • Tawcan

    Reply Reply 18th January 2015

    Hi Huw,

    Great buy. Royal Dutch Shell is a company that I plan to add to our dividend portfolio in the near future. Solid company, great yield, what else not to like?

  • Huw Davies

    Reply Reply 18th January 2015

    Hi Tawcan,

    Thanks! I agree, a very solid company with great dividends. I think it's at an attractive price right now. Although there are many other companies at good prices right now. It's not easy selection one at times!

    Cheers
    Huw

  • Theres Value

    Reply Reply 18th January 2015

    Hi Huw, great buy. Yes, I'm planning to add to my RDSB this Friday, as I only trade once per month on the 23rd. I'm considering National Grid too. I might get both, or either, depending on how much spare money I'll by then,

    Cheers

  • weenie

    Reply Reply 19th January 2015

    Hi Huw, I already hold a few shares in BP and was deliberating on whether to add to them or buy Shell. Maybe opt for the latter – as you say, spreading the investments across the two major players in the oil/gas industry.I'll just continue to keep an eye on them for now though – have my eye on diversifying into some consumer cyclical shares first.

    Good luck with these!

  • DividendsForDummies

    Reply Reply 19th January 2015

    Very nice purchase. I added shares of RDS-B last month too. Solid company, and the yield is incredibly high right now.

  • Dividend Dreams

    Reply Reply 19th January 2015

    Great buy. I am long on energy stocks and I am excited about the sale going on in this sector. I do not own Shell, perhaps I'll add this company to my portfolio as well. Best of investing luck in 2015.

  • Huw Davies

    Reply Reply 19th January 2015

    Thanks M! I think they're both great options. I would say that as I own both!

    NG are likely to be more stable over the long term with regards to share price, and without checking their share price is likely to be bit higher right now as a result. But they're both solid income providers paying higher than average dividends. Good luck with your decision. I'm routing for you!

    Cheers
    Huw

  • Huw Davies

    Reply Reply 19th January 2015

    Hey Weenie,

    BP are very attractive right now, and I understand why people are sucked into them more than Shell at present. I want to invest for the long term, and I'd prefer to separate my holdings in each sector to spread the risk a little. If anything happens to Shell, BP might be OK and visa versa. I've done the same thing in the mining industry with BHP Biliton and Rio Tinto.

    If you already have money invested in BP, I think you're doing the right thing by looking elsewhere for now. There are plenty on sold consumer cyclical shares out there to benefit from. I'll look forward to seeing what you end up going for. Good luck!

    Cheers
    Huw

  • Huw Davies

    Reply Reply 19th January 2015

    Hi DFD,

    Thank you very much. It's nice to be a shareholder with you!

    Thanks for stopping by
    Huw

  • Huw Davies

    Reply Reply 19th January 2015

    Hi DD,

    Thank you for stopping by. I appreciate the kind words.

    There are many great deals out there right now. It's nice to have a bit of capital to get a piece of them. Good luck with your decisions too. All the very best!

    Huw

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