Royal Dutch Shell (RDS-A), the second largest oil and natural gas company in the world behind only ExxonMobil (NYSE: XOM), is selling off assets, most recently a natural gas field in Qatar.
Wall Street approves as the stock price is up nearly 18 percent for 2014.
Investors are putting a premium on oil and natural gas companies that slim down. Royal Dutch Shell has been focusing on that. There is even more of a premium for those that have concentrated on oil and natural gas holdings in the United States.
That certainly accounts for much of the price rise in the stock price of Royal Dutch Shell!
In a low interest rate environment, Big Oil stocks with big dividends like Royal Dutch Shell and ExxonMobil are also favored. At present, the average dividend yield for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 1.8 percent. The dividend yield for Royal Dutch Shell is 3.98 percent. In addition, Royal Dutch Shell has a history dividend growth,
The changing role of oil in the investment landscape has also led to the stock price rise for Royal Dutch Shell.
Oil is replacing gold as the safe haven asset in times of trouble. This is happening for many reasons. The oil market is much bigger is a major factor. Oil has an industrial use: gold does not. As a result, supply and demand issues have an impact on the price of oil. There is a need for oil. There is not for gold.
That makes oil a much more appealing asset to hold in times of turmoil.
Turmoil around the world is a major reason Royal Dutch Shell is selling off assets. That should continue. Investors for the long term should expect the price to continue rising, along with the amount of the dividend!