There are have been many other articles on this site about the positive aspects of investing in Big Oil stocks such as Royal Dutch Shell (NYSE: RDS-B), ConocoPhillips (NYSE: COP), and and Sasol Ltd (NYSE: SSL). A major reason for long term investing in these oil and natural gas companies is the dividend income. Here are 3 reasons why the dividend income from these Royal Dutch Shell, ConocoPhillips, and Sasol Ltd is so compelling for investors.
Dividend income is a huge chunk of the total return.
According to investing legend John Bogle, the founder of the Vanguard family of mutual funds, in his book “Enough,” the interest component of a stock has been more than 40 percent of the historic total return of an equity. In a down market, the dividend income is the only positive part of the total return. If more shares are bought when the stock price falls, the dividend yield is that much higher.
It is a secure return for investors.
There is much to be said for locking into a high return for any investment. Sasol Ltd, Royal Dutch Shell, and ConocoPhillips all have dividend yields well above the average of just under 2 percent for a member of the Standard & Poor’s 500 Index. The stock market is a great place to invest. But as all investors know, prices fluctuate. Having a steady, secure stream of dividend income should be a part of every portfolio.
The dividend yield will, most likely, grow over time.
ConocoPhillips, Sasol Ltd, and Royal Dutch Shell have a history of increasing the amount of the dividend. It is difficult to find another income investment that raise the amount of the payment to the investor. Basically, the longer an investor owns the stock, the more that Royal Dutch Shell, Sasol Litd, and ConocoPhillips pays them to be a shareholder due to the size of the dividend payment growing over time!