Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery

In my view, Royal Dutch Shell's (NYSE:RDS.A) (NYSE:RDS.B) stock should be included in every diversified large-cap dividend stock portfolio, and now is the right time to buy the stock. While waiting for a significant rebound in the price of oil, investors can enjoy the generous dividend currently yielding 6.8% a year. Shell clearly said that its quarterly dividend is $0.94 per ADS. According to its last stock price of $55.30, the annual yield is at 6.8%. Moreover, the company guaranteed this payment for 2015, and at least the same amount in 2016 (each ADS represents two ordinary shares, two A Shares in the case of RDS.A).

In my view, the company's shares will significantly appreciate when oil prices recover. Since I do not expect oil prices to fall dramatically from their current value, the down risk of the shares is limited. While waiting for a significant rebound in the price of oil, investors can enjoy the generous dividend yielding about 6.8% a year. The company has a long record of raising its dividend. Even during the global economic crisis of the years 2008-2009, Shell continued to increase its dividend. In contrast to other major integrated oil & gas companies, the company generated positive free cash flow during the first half of 2015. In my view, the stock should be included in every diversified large-cap dividend stock portfolio, and now is the right time to buy.

Source: Seeking Alpha

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