Discussion
Much to my surprise my RDS shares have managed 7.6% dividend net. I know very little about shares and sharedealing but how reliable are dividends? The oil industry has taken a hit which is reflected in the share price, but I was surprised about the dividend. If they can pay 7% in hard times maybe I should buy some more... or will it fall to zero the day after I invest?
Same as the BP shares i hold, they are just on 8% i think.
The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
Simpo Two said:
Thanks folks, I appreciate your input.
So why don't people put all their money into the likes of BP and Shell rather than fanny about with 'funds' that support a whole Christmas Tree of middlemen and go up and down like a tart's knickers? 'But it's a long term investment sir...'
Between August 2014 and January 2016, the share price dropped almost 45%. That puts your 8% dividend into perspective...!So why don't people put all their money into the likes of BP and Shell rather than fanny about with 'funds' that support a whole Christmas Tree of middlemen and go up and down like a tart's knickers? 'But it's a long term investment sir...'
sidicks said:
Between August 2014 and January 2016, the share price dropped almost 45%. That puts your 8% dividend into perspective...!
Interesting - so as share price goes down, dividend goes up pro rata...?So if the share price were to double, would the dividend halve or would it double too?
Simpo Two said:
Interesting - so as share price goes down, dividend goes up pro rata...?
So if the share price were to double, would the dividend halve or would it double too?
Dividend rate = dividends / share price.So if the share price were to double, would the dividend halve or would it double too?
So if the share price halves, the dividend rate doubles, but you get the same cash amount.
The share price for Shell in August 2014 was around 2,550p
The share price for Shell in January 2016 was around 1,350p
(I'm deliberately cherry picking the recent extremes to exaggerate the effect).
If the dividends paid out were 108p per share, then:
Dividend yield as at August 2014 = 108/2550 = 4.2%
Dividend yield as at January 2016 = 108/1350 = 8.0%
gibbon said:
Same as the BP shares i hold, they are just on 8% i think.
The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
Actually BP has been borrowing money to maintain the dividend.The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
Frankthered said:
gibbon said:
Same as the BP shares i hold, they are just on 8% i think.
The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
Actually BP has been borrowing money to maintain the dividend.The reason for the high yield (normally 4-5% i think is as they are maintaining dividend payments despite the depressed price, partly as a statement to the market i think, hence the yield is increased. I know Shells position less well, but i imagine similar to BP in that they have huge cash reserves and i think at depressed level make great long term holds with great dividend payments.
I also like to think my quarterly divs pay for my petrol / a driving holiday etc so great to own a bit of a company you actually use.
Frankthered said:
Actually BP has been borrowing money to maintain the dividend.
Yes, the Jeremy Corbyn/John McDonnell model...IMO if there's no significant recovery in oil price the sector will eventually have to reduce dividends because it very clearly can't reduce costs sufficiently to make up the gap. The question is simply which company will crack and do it first - the rest will then surely follow.
Simpo Two said:
Interesting - so as share price goes down, dividend goes up pro rata...?
So if the share price were to double, would the dividend halve or would it double too?
Remember the dividend can be cut though! Shell is yielding 8% or whatever it is, because there is a market expectation the dividend amount will be cut. I.e if they cut it in half the yield would be back down to 4%. So if the share price were to double, would the dividend halve or would it double too?
The dividend should be looked at as interest, but on a capital sum that can rise or (more importantly) fall.
HMG are taking more interest in dividends too.
It is only worth doing the 'how much have I earned' calculation once you know the 'cash in' value and how much tax you have paid.
Obvious I know, but some forget when the dividend cheque arrives and leads them to think they are 'in the money'.
HMG are taking more interest in dividends too.
It is only worth doing the 'how much have I earned' calculation once you know the 'cash in' value and how much tax you have paid.
Obvious I know, but some forget when the dividend cheque arrives and leads them to think they are 'in the money'.
Storer said:
Interesting.
That £70k invested in the best E Type you could find two years ago would now see it worth £150k.
Oh, and no tax.
£70k on Red 27 would see that £70k now worth £2,520,000.That £70k invested in the best E Type you could find two years ago would now see it worth £150k.
Oh, and no tax.
It's easy to pick winners with the benefit of hindsight...!!
Edited by sidicks on Tuesday 5th April 22:05
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