Royal Dutch Shell (NYSE:RDS.A,RDS.B) is seeing RDS.A and RDS.B stock take a dive Thursday following news of a rare dividend cut.
According to a Royal Dutch Shell news release, the company is going to be paying out a dividend of 16 cents per share for the first quarter of 2020. For comparison, its dividend for the first quarter of 2019 was 47 cents per share.
Royal Dutch Shell notes that the dividend cut is due to the novel coronavirus. The impact the pandemic is having on the economy is causing trouble for the oil and gas company. That makes sense as gas prices plummet with fewer people traveling due to stay-at-home orders.
Chad Holliday, chairman of Royal Dutch Shell, said this in the news release.
“Shareholder returns are a fundamental part of Shell’s financial framework. However, given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the Board believes that maintaining the current level of shareholder distributions is not prudent. Following the announcement not to continue with the next tranche of the share buyback programme, the Board has also decided to reduce the first quarter 2020 dividend and reset to 16 US cents per share.”
Royal Dutch Shell will be paying the dividend to investors in RDS.A and RSD.B stock on June 22, 2020. Shareholders must be on record as of May 15, 2020 to receive the dividend.
RDS.A stock was down 11.6% and RDS.B stock was down 12.4% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
