Shell PLC Boosts Cash Dividend by 15 Percent Showing Commitment to Expand “Most Profitable Areas of Business”

Jun 14, 2023
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Shell Plc (SHEL.L) shares are adding 0.44% on premarket after the oil giant reported it will increase its dividend 15% and boost natural gas production as new CEO Wael Sawan refocuses on the fossil fuels that drove record profits last year.

Shell has been gradually increasing its dividend since former CEO Ben Van Beurden cut it at the height of the pandemic. While the latest increase will still leave the payout about 30% below pre-coronavirus levels, the move could help reassure investors that the company can be as reliable a source of cash as its higher-rated U.S. peers .

It is part of a strategy by the European oil majors to expand the most profitable areas of their business, even if they are carbon-intensive, while scaling back venture capital investments that do not yield high enough returns and appear increasingly risky in light of the currently unraveling banking crisis in the U.S.

Nevertheless, formally, the oil company reaffirmed its commitment to achieve net-zero emissions by 2050. In addition to the dividend increase, which will take effect this quarter, Shell has committed to buying back at least $5 billion of its shares in the second half of the year. The company will reduce capital spending to $2.2 billion to $25 billion a year in 2024 and 2025, compared with an expected $2.3 billion to $27 billion this year.