Shell to boost shareholder payouts as profits rise

Royal Dutch Shell is preparing to hike payouts to shareholders as oil prices surge amid a global post-Covid recovery.

The FTSE 100 business will pay out 20pc to 30pc of cash flow from operations, starting from its second quarter results on July 29.

It has not specified whether this will be through increases in the dividend or share buybacks. 

It is a boost for many thousands of retail shareholders who rely on oil stocks for a dividend after Shell, BP and other oil and gas majors cut their payments when the pandemic took hold last year and oil prices slumped – briefly turning negative in April 2020. 

Shell cut to its dividend last year for first since the Second World War. The chief executive, Ben van Beurden, said at the time that failing to do so would have left him “without options to reposition the company for the recovery and the future”.

It has since increased payouts twice before Wednesday’s announcement. 

Oil prices have been rebounding as demand for crude begins to recover, with many countries now emerging out of coronavirus lockdowns thanks to vaccinations.

Brent crude climbed above $77 on Tuesday amid a discord at Opec about how quickly to turn the taps back before losing ground to trade at about $74.50 on Wednesday. 

If oil stays at about $75 a barrel, JPMorgan Chase expects Shell to repurchase about $500m of shares in the third quarter. 

The increase in Shell’s returns sends an important message to the market, the bank’s analysts said in a note.