The generous dividend payout represents a payout ratio to the company's earnings of only 34%. RDS has over $470 billion in revenue and, as of the most recent quarter, had total cash of almost $19 billion. It has assets in 44 countries and it is keeping up with the trends and demands of the world's energy needs.
Royal Dutch Shell is one of the five biggest producers of oil in the world, but it's becoming more focused on natural gas. The plan is to convert the natural gas into clean-burning diesel to sell to countries that want a reliable, affordable and more environmentally-friendly form of energy.
Ironically, on Friday Royal Dutch Shell said it signed a 50-year profit-sharing deal with the government of Ukraine to explore and drill for natural gas in shale rock formations in the east of the country using the process widely known as fracking, according to
an Associated Press story
The report adds: "Ukraine's Energy Minister Eduard Stavitsky said investment in the project may reach $10 billion. Shell spokeswoman Julia Dudley Friday sent a joint statement issued by Shell and Ukraine's state-owned Nadra Yuzivska LLC stating each will have a 50% interest."
If investors are letting fear of buying the shares of RDS at current levels stop them, that could be overcome by placing a reasonable stealth
trailing stop alert
below the price paid, thus having an exit strategy that will limit the amount of downside risk.
Based on Shell's last earnings figures, the stock is selling with a PE ratio slightly above 8 and a trailing-twelve-month price-to-sales (P/S) ratio of only 0.48. The company will announce its latest quarterly earnings numbers on Thursday.
The report will be for the fiscal quarter that ended in December. According to Zacks Investment Research, based on just one analyst's estimate, the EPS forecast for the quarter is $2. The reported EPS for the same quarter last year was $1.55, so this would represent a 29% EPS increase. That doesn't sound like anything to be fearful about.