If you are interested in cashing in on Royal Dutch Shell plc’s (AMS:RDSA) upcoming dividend of US$0.47 per share, you only have 4 days left to buy the shares before its ex-dividend date, 15 November 2018, in time for dividends payable on the 19 December 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Royal Dutch Shell can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Royal Dutch Shell
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
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It is paying an annual yield above 75% of dividend payers
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It consistently pays out dividend without missing a payment or significantly cutting payout
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Its dividend per share amount has increased over the past
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It can afford to pay the current rate of dividends from its earnings
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It is able to continue to payout at the current rate in the future
High Yield And Dependable
Royal Dutch Shell currently yields 5.9%, which is high for Oil and Gas stocks. But the real reason Royal Dutch Shell stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of RDSA it has increased its DPS from $1.6 to $1.88 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes RDSA a true dividend rockstar.
The company currently pays out 72% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 59%, leading to a dividend yield of around 5.9%. However, EPS should increase to $3.17, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.