Yahoo Finance Shell (SHEL) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Shell in Focus
Shell (SHEL) is headquartered in London, and is in the Oils-Energy sector. The stock has seen a price change of 8.74% since the start of the year. The oil and gas company is paying out a dividend of $0.69 per share at the moment, with a dividend yield of 3.85% compared to the Oil and Gas - Integrated - International industry's yield of 2.83% and the S&P 500's yield of 1.6%.
In terms of dividend growth, the company's current annualized dividend of $2.75 is up 11.2% from last year. Over the last 5 years, Shell has increased its dividend 3 times on a year-over-year basis for an average annual increase of 2.55%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Shell's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SHEL expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $8.55 per share, representing a year-over-year earnings growth rate of 1.79%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SHEL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
