If there’s one thing that Shell (NYSE:SHEL) likes to do, it’s return capital to the company’s loyal shareholders. They do this through buybacks and dividends. Every passive-income investor needs to take a look at Shell stock and take advantage of the undeniable buy-and-hold opportunity.
I sincerely hope that my message reaches as many U.S. investors as possible. Since Shell is based in the United Kingdom, many American stock traders have little or no portfolio exposure to this energy giant. So, today is your lucky day, as you’ll get the need-to-know facts about Shell right now.
Slow and Steady Wins the Race
Investors shouldn’t expect Shell to grow rapidly, as the company is already huge. Among global oil, gas and renewables businesses, Shell is one of the biggest and most famous. It’s a consistently profitable company that has been around for many years and has an expansive energy-market presence.
Therefore, Shell’s growth should be taken into context and investors ought to be realistic. In 2024’s first quarter, Shell reported adjusted EBITDA of $18.711 billion, up 14.5% compared to $16.335 billion from the prior quarter. During that same time frame, Shell’s adjusted earnings improved 5.9% from $7.306 billion in Q4 2023 to $7.734 billion in Q1 2024.
It’s also encouraging to see Shell’s free cash flow increase from $6.9 billion to $9.8 billion, and the company’s net debt diminish from $43.5 billion to $40.5 billion. Clearly, the company is moving in the right direction from a financial standpoint.
Shell Shows Love to Its Shareholders
Here’s where the passive-income opportunity comes into play. Shell knows how to return value to its shareholders, and one way to do this is by paying a generous dividend.
On that topic, Shell just declared an interim quarterly dividend of around 69 cents per American depositary share, which could be considered a common-stock share in the U.S. This is in line with Shell’s track record of growing its quarterly dividend distributions gradually over time.
If Shell’s 3.53% forward annual dividend yield isn’t enough to impress you, then check this out. The company also announced a $3.5 billion share-repurchase program. Shell explained, using fancy terminology, that the purpose is to reduce the circulating pool of shares.
Naturally, a smaller pool of shares should make each existing stock share more valuable. It won’t be a dramatic effect, but more like an enhancement of Shell stock’s long-term value. This is something that respectful companies often do, so it’s another great reason to take a share position in Shell.
Shell Stock: Get Rich, but Do It Slowly
If wealthy people are of the get-rich-slow mindset, then you can apply this mindset by investing in Shell. And when the dividends come in, you can reinvest those distributions and leverage the compounding effect.
Just as importantly, you’ll be invested in a business with firm fundamentals and steady growth. Today is the perfect day to start building your wealth for the long term with a buy-and-hold position in Shell stock.