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Shell's payout: little margin for error

The low oil price is putting the squeeze on the biggest dividend payer on the London market. Will it have to make a historic cut?
July 14, 2017

Policy: “To grow the US dollar dividend in line with our view of the underlying earnings and cash flow of Shell”

Yield: 7.1 per cent

Payment: Quarterly, declared in dollars, paid in sterling (class ‘B’ shares)

Last cut: 1945 (as Royal Dutch)

IC TIP: Buy at 2,079p

Strictly speaking, a dividend yield above 7 per cent should be a red flag to investors. It’s the market’s way of saying future returns are in doubt. For Royal Dutch Shell (RDSB), this has been a familiar refrain ever since the oil market said goodbye to $100-a-barrel prices in 2014, and serious questions concerning the oil major’s commitment to shareholder returns started to grow.

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