Royal Dutch Shell Plc announced its intention to instill a 4% increase in dividends, as the company looks to recover from what has been a long-term slump due to climate change and the coronavirus pandemic.
This news has been warmly received by shareholders, particularly after the Anglo-Dutch energy giant decided to decrease dividends from 47 cents per share to just 16 cents in Apri —the first time that the organization has reduced dividends since the Second World War.
While Shell has endured a challenging year, announcing more than 9,000 job cuts in September, some good news has come from its third-quarter financial report. With an adjusted net income of $955 million, Shell exceeded the expectations of even the most hopeful of analysts.
Alastair Syme, an oil analyst at Citigroup Inc, remains wary as Shell’s decision to raise dividends will only prove successful should the company reduce its net debts. Its ability to do so remains in doubt, however, with several macroeconomic factors such as the ongoing pandemic proving to be major obstacles.
This year has been difficult for major oil companies at large as well. BP, Shell’s closest rival, also reduced its dividends due to trading at a multi-decade low.
