Never sell Shell - Why should I sell?
Royal Dutch Shell A (WKN: A0D94M | ISIN: GB00B03MLX29) is my largest position because it is also my oldest position. Since the global corona crisis and the low demand for oil and other petrochemicals, Shell has fallen over 50% (measured by my entry price). In addition, they have cut their "sacred" dividends sharply, which for some shareholders I know was the only reason to own the stock.
Cause for concern?
No, I don't think so. Shell's first quarterly reports were catastrophic, but a look at the peer group shows that it's not the company per se. Besides the low oil price, Shell was particularly hard hit by the suspension of air traffic due to the Corona crisis. Without international air traffic Shell cannot find buyers for various petrochemicals while Shell has high running costs. The cash flow is currently not in equilibrium, which puts a heavy strain on the balance sheet. In order to counteract this, Shell has now issued new bonds and is therefore in debt, but is also actively maintaining its cash flow. With the recurring air traffic, the original plan will be tackled. .png)
Source (Sorry, for the german language it should be in english avaible in your browser)
The dark side
Because of the new debt, there will be delays, especially the positioning of the future in relation to the future, namely to get away from fossil fuels will suffer. Nevertheless, I am confident that energy providers worldwide will at some point resort to exclusively green energy. (Hopefully in time)
Balance Sheet
The second quarter shows how badly Shell was hit by the Corona crisis. This is shown by the cash flow, which fell from 6.9 billion to 0.2 billion.
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Royal Dutch Shell Episode IV - A new hope
The cash flow of the third quarter is visibly lower than in the previous year, but it definitely gives hope for a recovery. Shell has certainly been hit hard, but since a dividend of 0.16 cents is still being paid, I personally am sitting out the crisis. I would take the opportunity to buy more if I had enough money left over. I am not worried about the financing, the bonds have an Aa2 rating and in my opinion the government is certainly not interested in Shell going bankrupt. In my opinion, Shell is also a gas business with the takeover of BG Group (2015) that is not dependent on the oil price. Above all I see a movement away from oil in Europe (an example is the construction of the Nord-Stream-2 pipeline for gas supply).
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Are any of you invested in Shell?
If so, how do you currently feel about your investment?
I would be delighted if you would share your opinion and experience with me.
I'm invested in the "db x-trackers MSCI World Energy UCITS DR 1C (XDW0)", an ETF of the energy majors. (Maybe the European version of FILL.) Overweighting only one company, although a big one, seems to be very risky in these days. But I think Big Oil is a buy now. (I also posted about it.)
Which dividend yield do you estimate for Shell now? Or for any other giant?
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You are right with overweighting one Stock, but don't like the TER costs of ETF. With a buy and hold strategy I will just keep it and wait.
When I bought Shell the dividend yiel were over 6%. And this is ok if the dividend is not payed out of the substance of the company. That's why it was acceptable for me last year, but after that Crash in March and the following month the "6%" shrinked a lot. If I would buy more at 10€ per share, then it would be like again for me, but as a beginner I still try to buy more of different sectors.
With a dividend of 0,165 cents the price should be below 10€ per share or you buy it anyway and just wait. :)
Hello @litshit69
At first glance I thought Shell was actually another form of cryptocurrencies attached to the oil and gas sector (petroleum) not knowing it's actually something different 😂
I think the company should focus more on achieving more income input to counter balance their debt level because debt itself can affect a company's earnings or profit on the long run.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💓💕❤️
Sorry for the confusion, but I am not sooo much into cryptocurrencies. ^^
Definitly, improving the cashflow is one of the most important thing, when the oil-price is down and the public life to. Selling their oil to such low prices would not be intellegent, so they rented tankships to store their produced oil. Meanwhile the oil-price stabilized since march and they sold more oil.
I am very excited about how shell wants to cut their debts in the futrure, while they want to invest in green energy too.
Thank you for your opinion @hardaeborla :)