Royal dutch shell

[kovalrock]

Hi everyone,

I have question regarding Shell's stock. I am willing to invest some money for long term and I came to have a look at Shell. Currently, the stock price makes it very interesting if one is interested about the dividend (the return may be 7-8%).

The past history is good, Shell always paid dividen each year. My question therefore : is it a safe investment knowing that oil is quite low currently and may not rise for few years ? (I plan not to use of the money I invest today before 7-10 years)

Thanks !

 

[dbphoenix]

No investment is "safe". And dividends are not guaranteed, particularly in the oil sector. If you want Shell for some particular reason, wait until it's stopped falling. If you draw a line from Nov '14's high down across the swing highs since then, you have some measure of strength and weakness to monitor. Until that line is broken, take care.

OTOH, if you want something to hold for years that pays a decent dividend, consider a dividend ETF, such as DWX or DVYE, each of which pays nearly 6%. These are also down during the same period and all good things come to those who wait. However, if you buy one of these ETFs, at least you're not betting so much on a single instrument but rather a basket of them.

Db

 

[Pat494]

Great company that has always come through thick and thin imho

 

[hhiusa]

No investment is "safe". And dividends are not guaranteed, particularly in the oil sector. If you want Shell for some particular reason, wait until it's stopped falling. If you draw a line from Nov '14's high down across the swing highs since then, you have some measure of strength and weakness to monitor. Until that line is broken, take care.

OTOH, if you want something to hold for years that pays a decent dividend, consider a dividend ETF, such as DWX or DVYE, each of which pays nearly 6%. These are also down during the same period and all good things come to those who wait. However, if you buy one of these ETFs, at least you're not betting so much on a single instrument but rather a basket of them.

Db

What you said about the dividends not being guaranteed is definitely something to think about. Many dividends tracking sources I have looked at rate it as having low dividend stability.
https://www.dividata.com/stock/RYDAF
http://www.shell.com/investors/dividend-information/latest-dividend-announcement.html

I would buy VNR:US and COP:US if you are looking for good dividend stocks in the oil and energy sector. VNR currently has a 43% dividend yield. If the price did not move up at all, you would still make a 43% return. Even if the price dropped 43%, you would still break even.

 

[dbphoenix]

I would buy VNR:US and COP:US if you are looking for good dividend stocks in the oil and energy sector. VNR currently has a 43% dividend yield. If the price did not move up at all, you would still make a 43% return. Even if the price dropped 43%, you would still break even.

If one buys these stocks for the dividends, it pays to monitor them closely. Vanguard just cut its distribution by 75%. This represents a 12% yield at current prices. And even that can't be guaranteed.

Db

 

[hhiusa]

If one buys these stocks for the dividends, it pays to monitor them closely. Vanguard just cut its distribution by 75%. This represents a 12% yield at current prices. And even that can't be guaranteed.

Db

1) I do not buy for dividends as I do not buy long term. 2) I posted two stocks, which are not the be all end all. Vanguard still has a decent track record according the images I posted.

COP has a very reliable track record in dividend payment history.

Additionally, in the US, 26 USC §§ 243-246 details the criteria for a DRD. Dividends paid by a corporation to a 0-20% shareholder are 70% deductible in the case where the dividend paying stock is held for 45 or more day before the payment date and 45 or more days after the payment date. Thus, regardless of the dividend yield, dividend paying stocks are a great and nearly tax-free income stream. The remainder of the dividend payment is only taxed at 15%, making the effective tax rate 4.5%.

If you incorporate around your portfolio, you separate youtself legally from the corporation and become a 100% shareholder. Reapplying §§ 243-246 gives you a 100% dividend received deduction in the case of 80-100% shareholders. Now, 10% non-dividend income (money you would normally pay capital gains upon) from the market can be dispensed to you from your portfolio (from your corporation) effectively tax-free. However, this can only be applied to 10% of E&P.

You may choose to trade however you wish. I am quite content with my trading style.

 

[dbphoenix]

You may choose to trade however you wish. I am quite content with my trading style.

No criticism of your trading style was intended. I meant only to point out that dividends are not guaranteed, particularly in the current environment. My original comments were directed to the OP, who is interested in dividends and in longer-term investing.

Db

 

[hhiusa]

No criticism of your trading style was intended. I meant only to point out that dividends are not guaranteed, particularly in the current environment. My original comments were directed to the OP, who is interested in dividends and in longer-term investing.

Db

Nothing is guaranteed in the market. Banking upon dividends is plus and not having them is not problem. If he invests in a stocks for dividends, it still would not matter if they do not pay them for a quarter or two. Something is better than nothing. They are also tax advantageous with regard to my previous post. I also think that it will be unlikely that they discontinue their dividends altogether.

 

[Pat494]

The Y*nks hate foreign oil companies like BP and Shell. Especially if they are doing well. Once upon a time I worked for them.

Was the BP blowout in the Gulf of Mexico a complete accident ? We shall probably never know but............................

 

[dbphoenix]

The Y*nks hate foreign oil companies like BP and Shell. Especially if they are doing well. Once upon a time I worked for them.

Was the BP blowout in the Gulf of Mexico a complete accident ? We shall probably never know but............................

I have no feelings about Shell one way or the other. But even if I did, it wouldn't have anything to do with the fact that price is in a downtrend and has not yet hit bottom.

Db

 

[hhiusa]

Maybe BP uses defeat devices as well. It seems to be a European thing nowadays.
jk

 

[Pat494]

Maybe BP uses defeat devices as well. It seems to be a European thing nowadays.
jk

What are those ?
You mean to get some sympathy ?

 

[hhiusa]

What are those ?
You mean to get some sympathy ?

Defeat devices were in Volkswagens to beat emissions. How quickly they forget.
Maybe they don't want to remember.

 

[Pat494]

It would only take one knowledgeable man to be bribed on the oil platform to cause such destruction as was seen in the Gulf.

 

[kovalrock]

Ok thanks for your replies. I will wait a little before buying Shell. I did no know about ETF, I have to gather more information about them (I am not about what are the differences between ETF and mutual funds)

 

[dbphoenix]

Ok thanks for your replies. I will wait a little before buying Shell. I did no know about ETF, I have to gather more information about them (I am not about what are the differences between ETF and mutual funds)

Fees for ETFs are generally much less. And there are other differences which may or may not be important to you. But as there's tons of information on ETFs v mutual funds online, there's no need to go into it here.

I should point out that until the sector turns around, there's not much point in buying anything specific. Being paid to wait via dividends sounds great in articles, but if the price is sinking, you're still in the red.

What you can do if you don't like twiddling your thumbs is to monitor the leaders in the sector and look for what are called "indicator stocks". The sector after all consists of stocks, and it isn't until the stocks begin to move that the sector moves. If you can locate the stocks -- the indicator stocks -- that are moving first and thus nudging the sector, they will most likely be those that will lead the advance.

If you're interested in following sector and group charts, I'll explain how to go about doing that.

Db

 

[dbphoenix]

As per our PM exchange, this is what I mean by "indicator stocks" (there is, of course, nothing new in this).

First, the sector, energy.

Then, the group, major oil & gas. Both the sector and the group appear to be putting in double bottoms.

Then, the stocks.

First up is CVX. Note how much stronger it is than either its group or the sector.

Next is XOM. Strong but not as strong. It managed to recover after dropping below the last swing high before the reversal, but CVX never dropped below that level in the first place.

Next, BP. holding above the low, but not what one would call "robust".

And then yours, Royal Dutch, so weak that it made a lower low.

So which would make the better candidate for a longer-term buy and hold?

 

[kovalrock]

Ok I see your point. CVX is obviously the best choice. You gave me an explanation with SLA, my next question is kind of subjective I guess but nevertheless : is it commonly recognize that SLA gives the most consistent answer regarding stock picking ?

 

[dbphoenix]

Ok I see your point. CVX is obviously the best choice. You gave me an explanation with SLA, my next question is kind of subjective I guess but nevertheless : is it commonly recognize that SLA gives the most consistent answer regarding stock picking ?

Actually "SLA" has nothing to do with it; it's a matter of supply and demand, higher lows and lower lows.

As for the "picking" aspect of it, this goes back a century or more.

Is the market strong or weak?

If weak, stand aside.

If strong, which are the strongest sectors?

Of the strongest sectors, which have the strongest groups?

Of those groups, which have the strongest stocks?

I guess the vendors don't explain this stuff anymore as anyone can do it himself for free. But there's really nothing to it. Just go to bigcharts.com, start with the sectors, and work your way down. No software necessary nor indicators.

Db

 

[steve zodiac 57]

Hi everyone,

I have question regarding Shell's stock. I am willing to invest some money for long term and I came to have a look at Shell. Currently, the stock price makes it very interesting if one is interested about the dividend (the return may be 7-8%).

The past history is good, Shell always paid dividen each year. My question therefore : is it a safe investment knowing that oil is quite low currently and may not rise for few years ? (I plan not to use of the money I invest today before 7-10 years)

Thanks !

I would buy some definitely. The market is discounting a dividend cut so there could be surprise on the upside.I don't hold sway over the argument that the oil price is going to be depressed for years -there could be a strong recovery when it is least expected. If you can see through the short term difficulties then I would say Shell is very good value at these levels.