For generations, every since the John Rockefeller founded Standard Oil, an investment in the oil company has generated consistent profits. The oil companies supply the oil and gas needed to drive vehicles and electricity to power plants for people to live in urban environments. There has been many good things which came out of the oil and gas companies.
In an article by Ron Bousso and Shadia Nasralla of Reuters, one of the 7 sisters of the oil business has been Shell Oil and it made $11.5 billion in profits. The record results topped the previous quarter. The company decided to use $6 billion to buy back shares (reduce the number in circulation) but did not increase its dividend. Last year, the company bought back $8.5 billion in shares. The company noted shareholder returns would be in excess of 30% of cash flow from operating activities.
In 2021, the company made $5.5 billion, in the first quarter of 2022 it was $9.1 billion and the second quarter it was up again to $11.5 billion, above analysts’ expectations of $11 billion.
Shell’s strong results reflected higher energy prices, higher refinery margins and strong gas and power trading.
Shell has debt of $46.4 billion, down from $48.5 billion 3 months ago. Shell’s debt to capitalization ration is 19.3%.
Linking to dividend paying stocks, it is hard not to own oil and gas stocks in a dividend portfolio because the companies have a history of making large profits. In the case of Shell profit was $5 billion and more than doubled to $11.5 billion, owning a stock with that type of earnings means you can hold on to for a long time. Over the years the combination of buybacks and dividends will increase your total return and that is a good thing.
There are more questions than answers, till the next time – to raising questions.