Royal Dutch Shell
Royal Dutch Shell (RDS.A, RDS.B) might not look attractive compared to U.S. companies, considering it’s down roughly 5% vs. broader-market gains in the high teens domestically. Part of that weakness has come amid a huge $2 billion charge Shell took for failed shale investments.
RDS is one of a few global integrated oil operators that has both upstream businesses (exploration and development) and downstream categories (like refining, shipping and gas chains) — a diverse build that helps protect against volatile markets. Besides, the long-term potential for crude oil still looks bright. Continued growth in Asia should keep demand robust.
Shell thinks it will generate a whopping $175 billion to $200 billion in cash between last year and 2015 assuming oil prices of $100 per barrel — a price that has become reality for months now.
That bodes good things for Shell’s dividend, which stands at 90 cents quarterly for a yield of 5.3%.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.