Shell boosts dividend and launches $2bn share buyback as earnings pop
Shell said that it would increase its dividend and kick off a $2bn share buyback programme as its second quarter earnings hit their highest levels in two years.
The oil giant said that earnings came in at $5.5bn, up 71 per cent on the $3.3bn it took in the same period last year.
Increased oil prices as a result of the economic recovery from the pandemic were the chief driver behind the jump, the FTSE 100 firm said.
Shares in the firm rose 3.3 per cent as markets opened this morning, while analysts hailed the dividend boost as a “positive surprise”.
On the back of the increase in earnings, Shell said it would pay out a dividend of 24 cents per share, up 38 per cent on the prior quarter.
It also confirmed that it would launch its share buyback programme, part of plans to return 20-30 per cent of cash flow to shareholders this year.
The firm also said that net debt was reduced by $5.6bn in the second quarter to $65.7bn, down from $71.3bn at the end of last quarter.
In a statement, chief executive Ben van Beurden said: “We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy.
“The quality of Shell’s operational and financial delivery and strengthened balance sheet have given the Board confidence to rebase the dividend per share from the second quarter 2021 onwards to 24 US cents.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that today’s announcements had rewarded Shell investors’ patience.
“Patience has been the name of the game for Shell investors who have been forced to watch and wait as the energy giant has been undergoing a painful green metamorphosis while grappling with the price shock of the pandemic.
“That stoicism, was sorely tested, but is now being rewarded with a slap on the back of rising returns, with $2bn of share buybacks and an increase in the dividend to 24 cents a share.”
But she warned: “Shell still has a tough time ahead, it needs higher oil prices to be sustained to keep on the front foot, and it could also be tripped up as it comes under increasing pressure to step up its renewable shift.”