Shell hikes dividend and kicks off £1.4bn shares buyback

The oil giant has been able to return to investors money that the pandemic forced it to withhold last year.

August Graham
Thursday 29 July 2021 08:09
Last year Shell slashed its dividend for the first time since the Second World War (Anna Gowthorpe/PA)
Last year Shell slashed its dividend for the first time since the Second World War (Anna Gowthorpe/PA)

Oil giant Shell has upped its dividend and started buying back millions of shares from investors after the business broke through performance expectations.

Shell said the buybacks will return around 2 billion dollars (£1.4 billion) to shareholders before the end of the year.

It also increased its dividend from 16 cents (11p) to 24 cents (17p).

The move comes about a year after Shell took the almost unprecedented step of cutting its dividend.

Following a massive collapse in the price of oil, which saw the commodity dip below zero dollars per barrel during the early parts of the pandemic, Shell slashed payouts for the first time since the Second World War.

But on Thursday chief executive Ben van Beurden was able to deliver better news to shareholders.

“We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy,” he said.

This link between the dividend and Shell’s drive to become a more renewable company, will be key going forward. The business must keep shareholders on board as it invests big money in the energy transition to ensure it meets its 2050 net-zero target.

The most recent move was welcomed by investors, who sent the company’s stock up on Thursday morning. However the dividend is still far from the 47 cents (34p) level it was cut from last year.

Shell’s adjusted earnings reached a little over 5.5 billion (£4 billion) during the second quarter of the financial year – more than eight times last year’s levels.

Analysts had expected this figure to soar, but only to 5.1 billion dollars (£3.7 billion).

Mr van Beurden added: “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 Q2 2021 onwards to 24 US cents.

“We are also launching 2 billion dollars of share buybacks, which is targeted to be completed by the end of this year.