Shell as a long term investment strategy

[Dod101]

If only, if only we knew the future, trading Shell shares would make all of us a lot of money. Because of its size maybe we can trade them by carefully watching their price. I do not think I have the patience or inclination to do that and so I just hold them. On that basis they have not done much over the last several years. They are one of a cohort of big companies which have held their dividend for around five years so have not progressed my wealth very much but I suppose have not lost me too much either.

Dod

[Shaker]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

[dspp]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

I hold. That does not mean I am correct. regards, dspp

[kempiejon]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

That's certainly high yield so bang on for this board. "Never sell Shell," they do still say that do they? Mind you the dividend has been static for 6 years.

[jackdaww]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

That's certainly high yield so bang on for this board. "Never sell Shell," they do still say that do they? Mind you the dividend has been static for 6 years.

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i will be very happy indeed for another six years of a static 13% ...

[TheMotorcycleBoy]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

I cut out 70% of our holding on Tuesday when it rallied after Monday's shocker. I'd rather put the cash into stuff which I think the planet's consumers will want to consume in the next 30 years e.g. food, tech, entertainment, electricity, health. I wish I'd never considered oil stocks (I should have listened more to DSPP in 2018, when he said "if you just go after dividends you will lose money") in my portfolio.

IMAO we've got the situation we got right now, cos there's oversupply, and could be the case for some time. What with fears about the world getting hotter and measures already going to mitigate that (EVs, charging points, solar + wind investments), I don't really see this predominantly oil+gas firm really prospering. Yes I know they've got "other" diversified assets (e.g. hydrogen, wind perhaps), but when you buy a RDS share what % of your money is going into assets with long term growth prospects, as opposed to the assets associated with CC in midst of price wars and wild environmental debates?

Matt

[jackdaww]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

I cut out 70% of our holding on Tuesday when it rallied after Monday's shocker. I'd rather put the cash into stuff which I think the planet's consumers will want to consume in the next 30 years e.g. food, tech, entertainment, electricity, health. I wish I'd never considered oil stocks (I should have listened more to DSPP in 2018, when he said "if you just go after dividends you will lose money") in my portfolio.

IMAO we've got the situation we got right now, cos there's oversupply, and could be the case for some time. What with fears about the world getting hotter and measures already going to mitigate that (EVs, charging points, solar + wind investments), I don't really see this predominantly oil+gas firm really prospering. Yes I know they've got "other" diversified assets (e.g. hydrogen, wind perhaps), but when you buy a RDS share what % of your money is going into assets with long term growth prospects, as opposed to the assets associated with CC in midst of price wars and wild environmental debates?

Matt

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if the oil producers stop fighting and cut production , the rdsb SP will go up . IF...

but quite agree oils are not the investment they were .

[TheMotorcycleBoy]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

I cut out 70% of our holding on Tuesday when it rallied after Monday's shocker. I'd rather put the cash into stuff which I think the planet's consumers will want to consume in the next 30 years e.g. food, tech, entertainment, electricity, health. I wish I'd never considered oil stocks (I should have listened more to DSPP in 2018, when he said "if you just go after dividends you will lose money") in my portfolio.

IMAO we've got the situation we got right now, cos there's oversupply, and could be the case for some time. What with fears about the world getting hotter and measures already going to mitigate that (EVs, charging points, solar + wind investments), I don't really see this predominantly oil+gas firm really prospering. Yes I know they've got "other" diversified assets (e.g. hydrogen, wind perhaps), but when you buy a RDS share what % of your money is going into assets with long term growth prospects, as opposed to the assets associated with CC in midst of price wars and wild environmental debates?

Matt

===========================

if the oil producers stop fighting and cut production , the rdsb SP will go up . IF...

I totally agree JD. I ummed and ahhed considerably prior to making the cut. I set a Stop loss order in the and monitored the price every 40mins or so, moving my sell trigger price to be 4% below the live price each time it stepped up. After about 11am I forgot about it. Then when I got home later in the day, I discovered that the heap of shares were sold.

Thing is, weren't RDS's profits starting to look a bit shaky even before this recent turn of events?

[88V8]

I've been adding to Shell, and when the price falls on Monday (forget I said this if it doesn't) I shall buy more.

But my time horizon - late 60s - plays into my decision.

EVs.... I suspect that when EVs reach the secondary market, with their batteries past the first flush of youth, when owners realise that charging is not just a matter of plugging in and indeed fast chargers actually damage the batteries*, once the gulf between actual and advertised ranges becomes apparent, the gilt will start to come off EVs.
And how many garages are equipped to work on them?? Dunno, but I bet very very few.

V8

*this article focuses on phone batteries, but as you can see in the comments the same applies to EVs. https://newatlas.com/electronics/extend ... 6-92456261

[monabri]

I've been adding to Shell, and when the price falls on Monday (forget I said this if it doesn't) I shall buy more.
But my time horizon - late 60s - plays into my decision.
EVs.... I suspect that when EVs reach the secondary market, with their batteries past the first flush of youth, when owners realise that charging is not just a matter of plugging in and indeed fast chargers actually damage the batteries*, once the gulf between actual and advertised ranges becomes apparent, the gilt will start to come off EVs.
And how many garages are equipped to work on them?? Dunno, but I bet very very few.
V8

In addition, factor in a possible recession (resulting from covid 19) and, unless EV prices come down significantly, I can't see Mr & Mrs Average splashing out on a £30k+ Ford Focus sized car. Then there will be the charging issues and range anxiety , convenience, supporting infrastructure).

You've no doubt seen the Professor Cox (Horizon?) videos where he looks at the energy requirements for a growing population. That is truly frightening and it will knock any worries over C19 into a cocked hat! With current technologies we simply cannot meet the World's energy requirements with alternative energy production methods (unless someone knows how to replace Hydrocarbons as a fuel.

https://en.wikipedia.org/wiki/World_energy_consumption

With RDSB at sub £11 per share....

repair costs - do we have any idea what replacement parts will cost for EVs? If it is "modular" build then one might find the cost of a new "plug and play" part very expensive.

[dealtn]

What are people's thoughts on RDSB now? The share price has fallen by 43% in the space of 1 month. Div yield is 13%!

That's certainly high yield so bang on for this board. "Never sell Shell," they do still say that do they? Mind you the dividend has been static for 6 years.

========================

i will be very happy indeed for another six years of a static 13% ...

I'd be disappointed with that. I would be happier if the yield halved on that kind of time frame.

[monabri]

I'd be disappointed with that. I would be happier if the yield halved on that kind of time frame.

Yep, you're right. We want to buy shares now at a 13% yield and then hope the share price recovers such that new buys are at lower yield. Essentially though, we want the dividend payout to be at least maintained (I can't see an increase).

[TheMotorcycleBoy]

EVs:

I'm sure that the garages will catch on. Just like they did when we stopped fitting carbs and went fuel injection, along with cats and EMSs. Round Cambridge where I work charging points are springing up in all the works car parks. It's just a matter of time, IMO.

[scrumpyjack]

The big problem for Shell and other oillies is that Saudia Arabia's total cost per barrel is only about $9 whilst their cost is many times that.

If MBS accepts that oil is going to be unsellable in 20 or 30 years time, it makes sense for SA to lower the price to a level that is unworkable for the western oil producers (eg $20 - $25) and grab the whole market for himself.

If that is his plan, the Shell divi is not going to survive for long.

[TheMotorcycleBoy]

The big problem for Shell and other oillies is that Saudia Arabia's total cost per barrel is only about $9 whilst their cost is many times that.

If MBS accepts that oil is going to be unsellable in 20 or 30 years time, it makes sense for SA to lower the price to a level that is unworkable for the western oil producers (eg $20 - $25) and grab the whole market for himself.

If that is his plan, the Shell divi is not going to survive for long.

if what you say to true, particularly your first 2 paragraphs, does that not have interesting geopolitical consequences? For example will US become less cosy with the Saudis, ie less inclined to back them against yemeni and iranian hostilities?

[TheMotorcycleBoy]

Suggests paring back divis and buybacks

https://www.aljazeera.com/ajimpact/oil- ... more_links

[TheMotorcycleBoy]

The big problem for Shell and other oillies is that Saudia Arabia's total cost per barrel is only about $9 whilst their cost is many times that.

If MBS accepts that oil is going to be unsellable in 20 or 30 years time, it makes sense for SA to lower the price to a level that is unworkable for the western oil producers (eg $20 - $25) and grab the whole market for himself.

If that is his plan, the Shell divi is not going to survive for long.

In a rather revealing slide from the Dallas Fed survey, the average price that a driller needs to simply cover operating expenses (let alone earn a return) ranged from $23 in the Eagle Ford to $36 in “other” shale basins. In other words, with WTI currently trading below $25 per barrel, the “average” shale driller is not even covering the cost of keeping shale wells online.

Related: World’s Largest Oil Trader Says Demand Could Plummet By 20 Million Bpd
Those are just the costs for operating. Breakevens to drill new wells are roughly double those levels, with average breakevens for Permian wells at $46. But even that figure only includes the cost of drilling a new well, and excludes other costs, such as debt servicing, overhead, and other corporate costs. “At $40 per barrel, you’re in the hole; at $30, it is hard to even keep producing existing wells. Nothing can be drilled at $30 per barrel,” one oil executive said in the Dallas Fed survey.

From
https://oilprice.com/Energy/Crude-Oil/I ... s-Oil.html

[TUK020]

Triggered by a discussion on the "HYP" board.

There was an assertion that Shell was not suitable as a longer term (as in when you are still building your portfolio) as the dividend has been held flat in nominal USD terms for 5 years (thus not holding even in real inflation adjusted terms), and that the capital value has not progressed in that time.

After considering this for a while, I decided that I have a slightly different take on this, but possibly not one to discuss on the "HYP" board.

Shell have a stable dividend, and the board has put considerable effort into never having to cut it. Enviable record. They are a large and stable company with global reach, and the balance sheet to weather short term storms.
Stable dividend for 5 years, but a share price that has varied, up and down, by a factor of 2:1 over this period., along with market sentiment.

A structured tinkering approach, a la TJH, can extract portfolio growth by topping up/top slicing on the share when its price varies from the portfolio median. It would be interesting to see how a tinkered portfolio of only such stable/low risk/megacap dividend payers would perform.

One very large portion of humble pie coming up sir. Garnished with your own words.

Thank you, it looks delicious!

[monabri]

Most expensive pie I've ever bought and not a pleasant taste!

[Dod101]

The big problem for Shell and other oillies is that Saudia Arabia's total cost per barrel is only about $9 whilst their cost is many times that.

If MBS accepts that oil is going to be unsellable in 20 or 30 years time, it makes sense for SA to lower the price to a level that is unworkable for the western oil producers (eg $20 - $25) and grab the whole market for himself.

If that is his plan, the Shell divi is not going to survive for long.

Good call! It survived fro six weeks in fact!

Mind you I still think that Shell is a good long term share, especially if we consider the current situation is hopefully likely as bad as it gets for Shell (ridiculously low oil price and Covid 19) It may well hold its current dividend for some time but it will rise again. I am not selling.

Dod