Analysts at Hargreaves Lansdown see the restoration of Royal Dutch Shell’s (LON:RDSA) cash dividend as an ‘early Christmas present’, Citywire reports. The comments came as the Anglo-Dutch oil major cancelled its scrip dividend which allowed the company to make a proportion of its payments to investors in the form of new shares instead of cash.
Investors also cheered the move, sending Shell’s share price 3.99 percent higher in London trading yesterday. The group’s shares have added just under a fifth to their value over the past year, and are up by some seven percent in the year-to-date.
‘Early Christmas present’
Citywire quoted Nicholas Hyett as commenting yesterday that Shell’s move to restore its cash dividend was ‘an early Christmas present’ for the group’s shareholders.
“Improved cash generation has allowed the group to scrap the scrip dividend, with the debt position improving steadily as well,” the analyst pointed out, adding that the extra shares issued under the scrip dividend programme were “set to be swept back up by a $25 billion (£19 billion) share buyback over the next three years”.
‘Not all plain sailing’
The analyst, however, cautioned that it was not all ‘plain sailing,’ with the ambitious targets for a lower carbon footprint from energy products reflecting “an increasingly carbon-conscious market, that’s also reflected in the group’s ongoing investment in new energies, which is set to step up from here”.
JPMorgan Chase, which sees Shell as an ‘overweight’ lifted its price target on the shares from 2,650p to 2,850p yesterday, while Citigroup remains bearish on the Anglo-Dutch company with a ‘sell’ rating and a valuation of 2,050p. According to MarketBeat, the FTSE 100 energy major currently has a consensus ‘buy’ rating and an average price target of 2,437.40p.