There is a reason that Royal Dutch Shell (RDS-A) is up for the week, but down for the last month, quarter, and six months of market action (chart below).
Royal Dutch Shell just reported higher earnings for the third quarter.
As a result, it is up more than 2.6 percent for the last week of trading. Royal Dutch Shell also reported increases both in upstream and downstream income. Like many other oil and natural gas entities, Royal Dutch Shell is retrenching due to anemic global growth. That has resulted in less demand for commodities such as oil and natural gas.
Royal Dutch Shell aims to emerge from its corporate reorganization as a leaner, meaner firm.
It is already the second largest oil and natural gas company in the world, behind only ExxonMobil (NYSE: XOM). Like ExxonMobil, Royal Dutch Shell has a solid balance sheet and healthy earnings statement. That leads to a robust dividend yield from Royal Dutch Shell.
With a dividend yield of nearly 4.10 percent, Royal Dutch Shell tops ExxonMobil in that critical component of a publicly held company.
Royal Dutch Shell also has a history of increasing the amount of its dividend. For the long term income investor, that results in getting a raise simply for not selling shares. That pays shareholders to be a long term investor, which is the generally the best overall approach.
Like ExxonMobil, Royal Dutch Shell has a balance sheet with little debt.
For long term investors, little debt with lots of dividend income and growth is an alluring combination. Due to its size, Royal Dutch Shell will never be a growth stock (its market capitalization is nearly $330 billion). But it has been a very rewarding stock to own as it has risen over 8 percent for the last year. Combined with the dividend yield, that is a solid return for long term investors looking for a Big Oil blue chip!