Record Highs - Don't Fall For Bad Reporting! [View article]
An interesting observation: the period of zero real return from 1973 - 1985 was accompanied by rising interest rates, while the period from 2000 - 2013 was accompanied by falling interest rates.
Royal Dutch Shell Runs For Cash To Create Shareholder Value [View article]
The basics of tax withholding on Shell dividends:
RDS.B - no withholding RDS.A, dividends received in cash or reinvested via a broker's own DRIP - 15% Dutch withholding RDS.A, dividends reinvested via Shell's Scrip Dividend Programme (not a broker's own DRIP) - no withholding
Whether shares are held in a taxable account or an IRA does NOT affect whether Dutch tax is withheld or not. This seems to be a source of confusion. Some countries such as Canada have different withholding policies for IRAs and taxable accounts; the Netherlands does not.
Note that for taxable accounts only, most or all of the Dutch withholding can often be recovered via the foreign tax credit. Dutch tax withheld in an IRA is lost forever.
If you wish to go the route of owning RDS.A and reinvesting dividends via Shell's Scrip Dividend Programme, call your broker and verify that they participate in Shell's program before purchasing shares. Some brokers do (I know Vanguard does) and some do not.
For a full discussion of RDS.A vs. RDS.B and of Dutch withholding tax, please see Dividends Boom's article comparing the two share classes, along with the comments to that article:
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
From Shell's web page on the Scrip Dividend Programme:
"Joining the Programme may offer a tax advantage in some countries compared with receiving cash dividends. In particular, dividends paid out as shares will not be subject to Dutch dividend withholding tax (currently 15 per cent) and will not generally be taxed on receipt by a UK shareholder or a Dutch corporate shareholder."
That's the whole paragraph. There's nothing mentioned about IRAs.
You may be confusing this with the tax policy of some other country. For example, it's my understanding that Canadian shares held in a taxable account are subject to Canadian withholding on dividends, but if they are held in an IRA, they are not. The Netherlands does not do anything like this.
With RDS.A, it's pretty simple. If you sign up for the Scrip Dividend Programme, there is no Dutch withholding, period.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
RDS.A does not have to be held in a non-taxable account to avoid the Dutch withholding. It just has to be enrolled in the Scrip Dividend Programme.
As I stated in an earlier comment, I own RDS.A in a taxable account and my shares are enrolled in the Scrip Dividend Programme. The full amount of the dividend ($0.86/ADS last quarter) was reinvested into new RDS.A shares at the reference price, without any withholding.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
SKV,
If you own RDS.A in a taxable account and enroll in the Scrip Dividend Programme, there is no Dutch withholding. (You will still be subject to U.S. tax on the dividend, of course, the same as if you had invested in any other dividend-paying stock.)
Vanguard makes it very easy to enroll in Shell's Scrip Dividend Programme. Just elect to reinvest dividends by any means (you can even do it online) and Vanguard will automatically sign you up. Piece of cake!
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Sweeps,
RDS.A shares enrolled in the Scrip Dividend Programme are exempt from withholding regardless of account type. They do not have to be in an IRA. I hold RDS.A in a taxable account and am enrolled in the SDP. There is no withholding on my dividends.
You are correct in that the shares must be enrolled in Shell's program, not the broker's own DRIP. Vanguard will automatically enroll you in the SDP if you elect to reinvest dividends.
Sailing The Seas Of Natural Gas With Golar LNG [View article]
LNG Player and Jan,
I think there is some confusion as to what is meant by "breakeven", specifically the inclusion or exclusion of amortized fixed/sunk costs such as vessel depreciation.
It would make no sense to operate a vessel below the incremental/marginal/v... cost of operation (fuel, labor, etc.). It might very well make sense to temporarily operate at a rate that is above the marginal cost of operation but below the all-inclusive cost including the amortized fixed costs of the vessel. The vessel will depreciate whether it is being chartered or not. On an all-inclusive basis, including depreciation, you may lose less money by chartering the vessel "below breakeven" than by just letting it sit idle.
Too Much Unproductive Capital Makes Royal Dutch Shell A Sell [View article]
I can't tell you what Shell will do in the future, but the recent past may be a useful guide. Over the last 4 full quarters, Shell issued 101,926,489 A shares under the DRIP and repurchased 62,705,101 B shares to offset the dilution by 61.5%. Note that these are London shares, and 1 U.S. ADR/ADS equals 2 London shares.
You can see a complete history of Shell's issuances and buybacks on the Excel spreadsheet available here: http://bit.ly/13JWhID
Royal Dutch Shell: A Look At Profitability [View article]
I believe someone at Shell refused to disclose the price paid for Qatar gas, but said it was "not free". IIRC, Qatar gas is around 50 cents/MMBTU vs. about $4 in the U.S., low teens in Europe, and high teens in Japan. But a nickel a therm is pretty darn close to zero input cost and the resulting diesel fuel is sold at world market prices.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
You cannot take the foreign tax credit at all for an IRA, so IRA investors will either want to hold B shares or sign up for Shell's Scrip Dividend Programme.
Royal Dutch Shell: A Look At Profitability [View article]
That greater operational risk is a double-edged sword, and Shell's willingness to take it on sets them apart from the other majors.
Most major oil companies want to be the second to try something new. Shell often wants to be first. Shell has a long history of delays, cost overruns, and operational problems as they pursue bold new initiatives, but in the end they finally get it right and gain the first-mover advantage. Pearl GTL was budgeted at $5 billion but ended up costing $19 billion. But today Pearl GTL takes ridiculously cheap Qatar gas and converts it to diesel fuel. There's nothing else like it in the world. It practically mints money. The Motiva refinery expansion similarly had delays, cost overruns, and operational problems at first, but now it's doing fine. Shell's Arctic exploration is likely to turn out similarly.
Shell is not a boring investment, that's for sure.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Auto44,
I'm much more concerned about the dilution of the U.S. dollar than I am about the dilution of my Shell shares. As an investor, I think Shell's growth over time will far exceed the amount of dilution. I wish I could say that for the U.S. economy vs. the dilution of the U.S. dollar. I'm certainly not going to sell my Shell shares and go to cash!
Many companies issue shares and don't do any repurchases at all, while many others don't repurchase enough to offset issuances. Shell is in the latter category. I'm fine with that as long as the money not used to repurchase shares is used for the long-term benefit of shareholders, e.g., exploration, development, accretive acquisitions, paying down debt, etc.
As for your afterthought, there are many possible reasons. One is simply cash-flow-based. There are probably times that Shell has more cash available than at other times. When they've got more cash, they may buy more shares. Another is valuation-based. You will notice that there are times that Shell actually repurchases more B shares than it issues A shares, and that these seem to correspond to lower share prices. Shell might do this to support the share price or simply to get more shares for the same amount of money. If you look at the spreadsheet, the past few weeks they have been buying back shares at a pretty good pace, averaging almost a million London shares a day, which might actually suggest that they think the shares are undervalued at the current price.
XOM is a quality company; I can't argue against that. I happen to think that Shell's shares are a better value at their current price vs. XOM shares at their current price, so I own RDS.A instead of XOM. Obviously your opinion differs; that's what makes a market. Most likely we will both do reasonably well with our investments over time. I certainly hope that will be the case.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Auto44,
Here are the share repurchases and issuances by quarter for the past 4 quarters. Note that these are London shares; to get ADR/ADS equivalents, divide the share counts by 2:
12/21/2012 - 3/28/2013: 25,586,312 A shares issued, 19,017,118 B shares repurchased 9/21/2012 - 12/20/2012: 34,249,652 A shares issued, 12,959,013 B shares repurchased 6/22/2012 - 9/20/2012: 22,325,686 A shares issued, 5,606,231 B shares repurchased 3/23/2012 - 6/21/2012: 19,764,839 A shares issued, 25,122,739 B shares repurchased
Total: 101,926,489 A shares issued, 62,705,101 B shares repurchased. 61.5% of scrip shares issued were repurchased. Definitely more than half.
Source: Shell's "Scrip Issuance and Buybacks" web page and linked Excel spreadsheet: http://bit.ly/13JWhID
This web page also explains why they only buy back B shares at present.
As for the "watered down shares" being worth very little, they have the exact same value as the cash dividend, without withholding, on the days the reference price is set. If you think the shares you get from the Scrip Dividend Programme aren't worth much, then you must think the shares from your original investment aren't worth much either. In that case, sell your shares or don't buy them in the first place.
Shell's web site clearly explains that dilution will occur if a shareholder does not enroll in the Scrip Dividend Programme. At the current rate of repurchases, this dilution is about 2% per year. A shareholder who enrolls in the SDP will not experience dilution; in fact, their proportionate stake in the company will grow at about 3% per year.
Shell's web site is not failing to tell us anything. Quite the contrary, Shell is the most transparent company I know of. Do you know of any other company that makes share issuances and buybacks public with the detail given on that Excel spreadsheet, as promptly as they have done? They've got yesterday's buybacks on there!
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
"if you buy into the scrips program you not only do not get your dividend but your investment even with some more shares represents a smaller share of ownership in the company"
Unless Shell is issuing new shares for something other than the Scrip Dividend Programme, this can't possibly be the case.
If Shell repurchases, say, half as many B shares as it issues A shares in the SDP, then holders enrolled in the SDP will see their ownership stake slowly increase, while holders who take their dividends in cash will see their stake slowly decrease.
Shell's repurchase program is to reduce dilution caused by the SDP, not necessarily to eliminate this dilution. Shell's web site explicitly states that if you do not participate in the SDP and others do, that you will experience dilution.
Record Highs - Don't Fall For Bad Reporting! [View article]
Royal Dutch Shell Runs For Cash To Create Shareholder Value [View article]
RDS.B - no withholding
RDS.A, dividends received in cash or reinvested via a broker's own DRIP - 15% Dutch withholding
RDS.A, dividends reinvested via Shell's Scrip Dividend Programme (not a broker's own DRIP) - no withholding
Whether shares are held in a taxable account or an IRA does NOT affect whether Dutch tax is withheld or not. This seems to be a source of confusion. Some countries such as Canada have different withholding policies for IRAs and taxable accounts; the Netherlands does not.
Note that for taxable accounts only, most or all of the Dutch withholding can often be recovered via the foreign tax credit. Dutch tax withheld in an IRA is lost forever.
If you wish to go the route of owning RDS.A and reinvesting dividends via Shell's Scrip Dividend Programme, call your broker and verify that they participate in Shell's program before purchasing shares. Some brokers do (I know Vanguard does) and some do not.
For a full discussion of RDS.A vs. RDS.B and of Dutch withholding tax, please see Dividends Boom's article comparing the two share classes, along with the comments to that article:
http://seekingalpha.co...
Disclosure: Long RDS.A in my taxable account, reinvesting dividends via Shell's Scrip Dividend Programme, with no Dutch tax withholding.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
"Joining the Programme may offer a tax advantage in some countries compared with receiving cash dividends. In particular, dividends paid out as shares will not be subject to Dutch dividend withholding tax (currently 15 per cent) and will not generally be taxed on receipt by a UK shareholder or a Dutch corporate shareholder."
http://bit.ly/VLF5Sd
That's the whole paragraph. There's nothing mentioned about IRAs.
You may be confusing this with the tax policy of some other country. For example, it's my understanding that Canadian shares held in a taxable account are subject to Canadian withholding on dividends, but if they are held in an IRA, they are not. The Netherlands does not do anything like this.
With RDS.A, it's pretty simple. If you sign up for the Scrip Dividend Programme, there is no Dutch withholding, period.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
As I stated in an earlier comment, I own RDS.A in a taxable account and my shares are enrolled in the Scrip Dividend Programme. The full amount of the dividend ($0.86/ADS last quarter) was reinvested into new RDS.A shares at the reference price, without any withholding.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
If you own RDS.A in a taxable account and enroll in the Scrip Dividend Programme, there is no Dutch withholding. (You will still be subject to U.S. tax on the dividend, of course, the same as if you had invested in any other dividend-paying stock.)
Vanguard makes it very easy to enroll in Shell's Scrip Dividend Programme. Just elect to reinvest dividends by any means (you can even do it online) and Vanguard will automatically sign you up. Piece of cake!
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
RDS.A shares enrolled in the Scrip Dividend Programme are exempt from withholding regardless of account type. They do not have to be in an IRA. I hold RDS.A in a taxable account and am enrolled in the SDP. There is no withholding on my dividends.
You are correct in that the shares must be enrolled in Shell's program, not the broker's own DRIP. Vanguard will automatically enroll you in the SDP if you elect to reinvest dividends.
Sailing The Seas Of Natural Gas With Golar LNG [View article]
I think there is some confusion as to what is meant by "breakeven", specifically the inclusion or exclusion of amortized fixed/sunk costs such as vessel depreciation.
It would make no sense to operate a vessel below the incremental/marginal/v... cost of operation (fuel, labor, etc.). It might very well make sense to temporarily operate at a rate that is above the marginal cost of operation but below the all-inclusive cost including the amortized fixed costs of the vessel. The vessel will depreciate whether it is being chartered or not. On an all-inclusive basis, including depreciation, you may lose less money by chartering the vessel "below breakeven" than by just letting it sit idle.
Too Much Unproductive Capital Makes Royal Dutch Shell A Sell [View article]
You can see a complete history of Shell's issuances and buybacks on the Excel spreadsheet available here: http://bit.ly/13JWhID
Too Much Unproductive Capital Makes Royal Dutch Shell A Sell [View article]
The buybacks are to reduce dilution caused by issuance of shares under Shell's DRIP. I wouldn't read a whole lot into them.
Grierj,
I could not find the Morgan Stanley research you refer to. Can you please post a link?
Royal Dutch Shell: A Look At Profitability [View article]
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Royal Dutch Shell: A Look At Profitability [View article]
Most major oil companies want to be the second to try something new. Shell often wants to be first. Shell has a long history of delays, cost overruns, and operational problems as they pursue bold new initiatives, but in the end they finally get it right and gain the first-mover advantage. Pearl GTL was budgeted at $5 billion but ended up costing $19 billion. But today Pearl GTL takes ridiculously cheap Qatar gas and converts it to diesel fuel. There's nothing else like it in the world. It practically mints money. The Motiva refinery expansion similarly had delays, cost overruns, and operational problems at first, but now it's doing fine. Shell's Arctic exploration is likely to turn out similarly.
Shell is not a boring investment, that's for sure.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
I'm much more concerned about the dilution of the U.S. dollar than I am about the dilution of my Shell shares. As an investor, I think Shell's growth over time will far exceed the amount of dilution. I wish I could say that for the U.S. economy vs. the dilution of the U.S. dollar. I'm certainly not going to sell my Shell shares and go to cash!
Many companies issue shares and don't do any repurchases at all, while many others don't repurchase enough to offset issuances. Shell is in the latter category. I'm fine with that as long as the money not used to repurchase shares is used for the long-term benefit of shareholders, e.g., exploration, development, accretive acquisitions, paying down debt, etc.
As for your afterthought, there are many possible reasons. One is simply cash-flow-based. There are probably times that Shell has more cash available than at other times. When they've got more cash, they may buy more shares. Another is valuation-based. You will notice that there are times that Shell actually repurchases more B shares than it issues A shares, and that these seem to correspond to lower share prices. Shell might do this to support the share price or simply to get more shares for the same amount of money. If you look at the spreadsheet, the past few weeks they have been buying back shares at a pretty good pace, averaging almost a million London shares a day, which might actually suggest that they think the shares are undervalued at the current price.
XOM is a quality company; I can't argue against that. I happen to think that Shell's shares are a better value at their current price vs. XOM shares at their current price, so I own RDS.A instead of XOM. Obviously your opinion differs; that's what makes a market. Most likely we will both do reasonably well with our investments over time. I certainly hope that will be the case.
Best of luck with your investments.
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Here are the share repurchases and issuances by quarter for the past 4 quarters. Note that these are London shares; to get ADR/ADS equivalents, divide the share counts by 2:
12/21/2012 - 3/28/2013: 25,586,312 A shares issued, 19,017,118 B shares repurchased
9/21/2012 - 12/20/2012: 34,249,652 A shares issued, 12,959,013 B shares repurchased
6/22/2012 - 9/20/2012: 22,325,686 A shares issued, 5,606,231 B shares repurchased
3/23/2012 - 6/21/2012: 19,764,839 A shares issued, 25,122,739 B shares repurchased
Total: 101,926,489 A shares issued, 62,705,101 B shares repurchased. 61.5% of scrip shares issued were repurchased. Definitely more than half.
Source: Shell's "Scrip Issuance and Buybacks" web page and linked Excel spreadsheet: http://bit.ly/13JWhID
This web page also explains why they only buy back B shares at present.
As for the "watered down shares" being worth very little, they have the exact same value as the cash dividend, without withholding, on the days the reference price is set. If you think the shares you get from the Scrip Dividend Programme aren't worth much, then you must think the shares from your original investment aren't worth much either. In that case, sell your shares or don't buy them in the first place.
Shell's web site clearly explains that dilution will occur if a shareholder does not enroll in the Scrip Dividend Programme. At the current rate of repurchases, this dilution is about 2% per year. A shareholder who enrolls in the SDP will not experience dilution; in fact, their proportionate stake in the company will grow at about 3% per year.
Shell's web site is not failing to tell us anything. Quite the contrary, Shell is the most transparent company I know of. Do you know of any other company that makes share issuances and buybacks public with the detail given on that Excel spreadsheet, as promptly as they have done? They've got yesterday's buybacks on there!
Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]
Unless Shell is issuing new shares for something other than the Scrip Dividend Programme, this can't possibly be the case.
If Shell repurchases, say, half as many B shares as it issues A shares in the SDP, then holders enrolled in the SDP will see their ownership stake slowly increase, while holders who take their dividends in cash will see their stake slowly decrease.
Shell's repurchase program is to reduce dilution caused by the SDP, not necessarily to eliminate this dilution. Shell's web site explicitly states that if you do not participate in the SDP and others do, that you will experience dilution.