Royal Dutch – A High Yield Dividend Share

Most of you will probably have heard of Shell, or Royal Dutch Shell (RDSA and RDSB) as it is more properly known. BUT, did you know that this huge oil company, formed by the merger of a British and a Dutch business, started out as an antique shop in London? Bet you didn’t know that! From those humble beginnings, Mr. Marcus Samuel grew his business into an import/export enterprise which spanned the globe, as he added seashells from the Far East to his trade. Little did he know that this would lay the groundwork for future generations of the company to start importing oil and eventually become a company which employs about 92,000 people.

This is one of the reasons why I love investing in quality dividend-paying and growth companies. You can start off with something really small, and over many years it (hopefully!) will grow into a bigger and bigger return. Thus, Royal Dutch Shell is in fact, an extremely popular dividend share, held by masses of people in the UK. I’m pretty sure that the dividends received from this share are the cornerstone of many people’s portfolios, since Royal Dutch Shell is a very long-term high yield dividend share, and they pay quarterly. This quarterly, regular payment is important in smoothing out cashflow, and is something I’ve been thinking a lot about recently. It’s really important for retired people to have some sense of regularity in their income, particularly if they rely on investments.

Royal Dutch Shell are currently paying out 4.78% – that’s a seriously high yield dividend share if ever I saw one, and even better than BAE Systems, which traditionally is also a high yield dividend share. If you had enough invested in this one share, you could practically live off the income, which is probably what the Dutch royal family do, as they reputedly own at least 2% of this $174 billion company!

Now, the question is, can we trust that Royal Dutch Shell dividends will keep rising, especially since the price of oil has taken a right beating of late? I think we can. According to the London Telegraph, Royal Dutch Shell has been paying out increasing dividends ever since the end of the Second World War… now that history takes some beating! No wonder the now-abdicated Queen Beatrix of The Netherlands is a happy lady!

But more than that impressive history of increasing dividends, I am guessing that there have been some pretty rough times over the last 70 years. I am only old enough to remember from around the early 80s onwards, so I do remember the recent economic crash, the oil crisis in the early 2000s, and the crazy stuff that went on in the 80s stockmarket. I like to invest in quite boring companies, with a few small caps for extra excitement.

When I say boring, I mean a sound, necessary business, which doesn’t do anything too fancy or too unintelligible. If I don’t understand what they do, then I probably don’t want to invest in it. Royal Dutch Shell are in the oil business. Now, that is not too hard to understand, is it?

I’m thinking of gradually adding some more shares over the next, say 6 months or so. I feel that the price is pretty low right now, due to the oil prices having been whooped recently. It feels like a bargain to pick up RDSB at close to £20 a pop.

How about YOU, which high yield dividend shares are YOU investing in? Do you like Royal Dutch Shell? Let me know, pop a comment underneath.

 

Cheers!

2 Comments

  1. M,

    Glad to be a fellow Shareholder of RDS(B)! Like many other oil businesses RDS is an incredibly profitable business with a lot of moat – and it will be far into the future.

    If I wasn’t as heavy on energy stocks already, I’d definitely add more Royal Dutch to my portfolio too. Let me know if you decide to take the plunge and buy more shares!

    Cheers,
    NMW
    No More Waffles recently posted…Savings Rate for November 2014My Profile

    1. Hi NMW, thanks for visiting us again! I am DEFINITELY buying more RDSB this month, as I can only see the price going down from here, due to the current issues with oil production, as well as some interesting movements in the charts for the stock price… i.e. it looks like a downward trend is coming.

      I agree with you that I think they have a huge moat, and even if prices stayed down for a fair while, I still think they can cope. They have seen their fare share of trouble over the last 69 years, and yet their dividend history proves that they have maintained a healthy dividend over the very VERY long-term!

      Thanks again for stopping by!

      Cheers!

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