Get richer with 6.5%
There are certain shares that I believe every serious UK investor should own. This is a FTSE 100 company that no-one can deny is making money hand over fist and is one that I think will carry on enriching investors far into the next decade.
The Royal Dutch Shell ‘B’ (LSE:RDSB) share price has barely moved in the last 10 years: it’s just 3.1% higher than it was in December 2009. But this low volatility is actually something that I believe will make you richer with a long-term hold.
Between 2017 and 2018 Shell nearly doubled its operating profits from $19bn to $35bn, with revenues rising from $305bn to $388bn.
Shell should occupy pride of place in your portfolio for one good reason: you can take your 6.5% yields year after year, safe in the knowledge that the business is so competently run that it won’t cause you any heartache. The yield for next year is forecast at 6.8%.
As a snapshot of the company’s health, Q3 2019’s results are as good as any, showing strong cash generation, $10.1bn in free cash flow, a pretty conservative gearing of 27.9%, with “very strong earnings and optimization results” producing $4.8bn across the quarter.
In my opinion, the only consideration is the best price you can get your Shell shares at. The current P/E ratio is 10.4, forecast to increase slightly to 12.3 next year, so now is as good a time as any.
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