Feb 4, 2021

Shell defies earnings plunge with raised dividend

Royal Dutch Shell raised its dividend despite reporting a plunge in annual earnings to the lowest in at least 15 years, as the oil industry reels from the effects of the pandemic. Even though cash flow fell 40 per cent against a year earlier and net debt rose to $75.4bn from the prior three months, Shell decided to raise its dividend for a second time in recent months. As Shell sought to woo back investors, it raised the payout to 16.65 cents in October and has said it will again raise the dividend by 4 per cent to 17.35 cents a share in the first quarter of 2021. Once the company hits its net debt target of $65bn, Shell said it would aim to distribute 20 per cent to 30 per cent of cash flow from operations to shareholders through dividends and share buybacks. Sven Reinke at Moody's Corporate Finance said: "By hiking the quarterly dividend by 4 per cent, Shell relies more heavily on a market recovery in 2021-22 to achieve its targeted net debt reduction to $65bn."

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