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EurOil: Shell boosts investor appeal

Royal Dutch Shell has continued efforts to boost its investor appeal, announcing on July 29 that it would buy back $2bn of shares and raise its dividend by 40%.

The promise of greater rewards to shareholders comes after Shell reported its highest quarterly profits since 2018. The company took the tough decision in April last year to cut its dividend by two thirds, while most of its peers took less austere steps. The move was praised by analysts at the time as sensible, but it was also one that was detrimental to Shell’s investment case.

Since then, Shell has worked to placate investors by steadily increasing its dividend again. It raised the payout from $0.16 to $0.1165 per share in October last year, and then to $0.1735 for the first quarter of this year. It has now raised it to $0.24 per share for the second quarter.

While this is still much lower than the pre-pandemic dividend of $0.47 per share, Shell has promised to increase payments by 4% annually from now on. It also said it would finish its $2bn buyback by the end of the year.

“We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy,” Shell CEO Ben van Beurden said. He pointed to the company’s strong operational and financial numbers, and its improved balance sheet, as justification for the policy.

Shell posted $5.53bn in adjusted income in the three months ending June 30, in an increase from $3.23b in the previous quarter and a mere $0.62bn in the second quarter of 2020. Its European peers Equinor, OMV, Wintershall DEA and others similarly reported strong gains in the three-month period on the back of higher prices.