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Rick D

Rick D
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  • Shell to launch new scrip dividend program [View news story]
    A shares, whether purchased or received in lieu of dividends, will be subject to 15% Dutch withholding on their dividends unless they are enrolled in the Scrip Dividend Programme.

    If you hold B shares and reinvest the dividends, and your broker participates in the Scrip Dividend Programme, you will receive A shares as dividends. If you wish to avoid withholding on the dividends on those shares you should DRIP them via the SDP as well. This will probably require a separate DRIP election.

    In general, after March 20, Shell investors who wish to reinvest dividends and whose brokers participate in the SDP should own A shares rather than B shares. If you currently own B shares and wish to reinvest via the SDP, you should seriously consider switching to A shares between March 21 and May 12. Before doing so, you should check with your broker to make sure they will participate in the SDP, and, if in a taxable account, you should be aware of the tax ramifications associated with the switching of share classes.
    Mar 5, 2015. 10:30 PM | Likes Like |Link to Comment
  • Shell to launch new scrip dividend program [View news story]
    Shell has apparently discontinued buybacks for the time being. The last buyback they did was on January 29.

    Regardless, I doubt it will be terribly dilutive, and to the extent it is dilutive, it will help Shell conserve cash. I don't view it as particularly disappointing. It doesn't change my opinion of Shell as an investment at all.

    Disclosure: Long RDS.B, may change to or add A shares as a result of this announcement.
    Mar 4, 2015. 01:34 AM | Likes Like |Link to Comment
  • Shell to launch new scrip dividend program [View news story]
    Note that the new Scrip Dividend Programme takes effect with the first quarter 2015 interim dividend (ex-div date for ADS holders May 13, record date May 15, payment date June 22) and will not affect the fourth quarter 2014 dividend which has not been paid yet (payment date March 20). If you plan to change share classes or DRIP elections based on this announcement, you should probably wait until after March 20 to do so.

    The new Scrip Dividend Programme appears to work exactly as the old one did so guidance regarding which share class to own given in my Instablog post here should be valid after March 20:
    Mar 4, 2015. 01:27 AM | Likes Like |Link to Comment
  • Should I Own RDS.A Or RDS.B? [View instapost]
    Shell is restarting the Scrip Dividend Programme with effect from the first quarter 2015 interim dividend onwards. For ADR/ADS holders, the ex-dividend date for this dividend is May 13, the record date is May 15, and the payment date is June 22.

    This does not affect the fourth quarter 2014 dividend which has not been paid yet (the payment date is March 20, 2015).

    The new Scrip Dividend Programme appears to work exactly as the old one did, so the guidance in this Instablog post should be valid after March 20, 2015.

    Here is a link to the official announcement:
    Mar 4, 2015. 01:15 AM | Likes Like |Link to Comment
  • Falling Oil Prices Hit LNG Producers As Prices Collapse [View article]

    It's my understanding that power generators in Japan can and do readily switch between natural gas and fuel oil, so in that market at least oil and gas do compete. Furthermore, LNG in Asian markets has generally traded not at a set price, but floating relative to oil prices. Natural gas isn't cheap in Japan the way it has been here for a long time. They don't have a plentiful local supply as we here in the US do.

    In the US, for many decades fuel oil and natural gas were priced almost exactly the same on a per-BTU basis because many power generators could switch between fuels and so would use whichever fuel was cheaper, even if only by a small amount. However, as you observe, some time ago the pricing diverged and all the dual-fuel generators went to using only natural gas. The last time I'm aware of a dual-fuel generator being run on oil was during the California power crisis of 2000-2001. Natural gas supplies were restricted, prices soared, and some of the generators were temporarily switched to oil.
    Jan 21, 2015. 07:05 PM | Likes Like |Link to Comment
  • Falling Oil Prices Hit LNG Producers As Prices Collapse [View article]
    From the Chevron Australia website:

    "Approximately 70 percent of the natural gas produced by Chevron Australia will be sold as liquefied natural gas (LNG), primarily under long-term contract to major utilities in Japan, South Korea, China and Taiwan."

    Chevron is pretty conservatively run. I'm sure they would not have gone forward with Gorgon and Wheatstone without long-term commitments for most of the production at profitable prices. They do have some unallocated capacity from these projects, however, so they aren't totally immune from pricing pressures in the spot market for LNG.
    Jan 19, 2015. 01:28 PM | 1 Like Like |Link to Comment
  • Value Trap, Or Why The Prospects For Dorian LPG May Be Bleak [View article]

    This is an interesting article which raises some good points. But I'm not (yet) convinced that the situation is as bad as you are making it out to be.

    Many "LPG" carriers are actually multigas carriers that can carry other gases such as ammonia, ethane, ethylene, and propylene. I understand that demand for ammonia shipping is pretty steady and demand for ethane shipping is likely to grow substantially. Also, propane dehydrogenation doesn't have to take place in China. It can take place in the US and the resulting propylene can be shipped to China. Did you take into account the fact that many of the excess LPG/multigas carriers can be switched from LPG duty to carrying other gases?

    Unfortunately I could not find any information on Dorian's website as to how many, if any, of their carriers are multigas. But even if Dorian has no multigas carriers, wouldn't the other operators switching ships from LPG to other gases make the situation for Dorian less dire?
    Jan 12, 2015. 12:29 AM | 1 Like Like |Link to Comment
  • Stock Market Reversal In January: The Potential Effect Of Capital Gain Taxes [View article]
    Thank you for posting this article. I was wondering why AAPL sold off so heavily earlier today, while energy names mostly went up even though oil was down. Now it all makes sense.

    This is the kind of thing that I as a fundamentally-oriented long-term investor really don't think about that much. I try not to let the tax tail wag the dog. But sometimes non-fundamental things like this affect pricing, and this can offer opportunities.

    It would be interesting to know how long the tax-related selling lasts. I suspect it's a lot less than a full month.
    Jan 2, 2015. 05:09 PM | Likes Like |Link to Comment
  • An Oil Turnaround May Be Sooner Than You Think... And What Might Delay It [View article]
    Heavy industry isn't the only major user of oil. Consumer demand in the developing economies of Asia is rising, as people move up from bicycles to motorcycles and from motorcycles to cars. Overall GDP growth has quite a lot to do with this. Asia's rising middle class ensures that any demand drop is short term.
    Jan 1, 2015. 07:54 PM | 3 Likes Like |Link to Comment
  • Total: Undervalued Oil Giant With Secure 5% Dividend Yield [View article]

    When you said you bought some more, I thought you were referring to the dividend withholding on previously purchased shares. The 11 cents/share would have been about right.

    But it turns out that France apparently has had a 0.2% financial transaction tax on many stock purchases since 2012:

    I wonder why I was not charged this on my September purchase. I did purchase the ADRs on the NYSE. Did you purchase your shares directly on the French stock market?

    I also wonder why the bid/ask spread is much lower than the 0.2% tax. I'd think such a tax would deter market makers and arbitrageurs. Historically when Tobin taxes have been tried in the past they've absolutely killed liquidity.


    Thank you for telling us about this. I would not have known that France assesses such a tax otherwise.
    Dec 31, 2014. 11:39 AM | Likes Like |Link to Comment
  • Total: Undervalued Oil Giant With Secure 5% Dividend Yield [View article]

    COP's a fine company, no doubt about that, but it's upstream only and will be affected by the price of oil more than an integrated company like TOT.

    The "BS" is actually pretty minimal if you use a broker that does the proper paperwork for you, which a lot of them do. The depositary takes care of all the foreign stuff for you in exchange for a very minimal ADR fee. Many investors in taxable accounts can recover 100% of the foreign tax withheld via a single line item on Form 1040, so it likely won't cost you any more in taxes than a comparable US-based investment. What France taketh away, Uncle Sam will very likely give back to you in full.

    The fundamentals on TOT are pretty good, and the price is certainly attractive. As the article states, it's cheaper by most metrics than comparable US-based investments. I certainly wouldn't pass up an investment of this quality based on a fear of French taxes.
    Dec 30, 2014. 09:57 PM | 2 Likes Like |Link to Comment
  • Total: Undervalued Oil Giant With Secure 5% Dividend Yield [View article]
    I wasn't charged anything other than the usual brokerage commission when I bought some TOT shares in September. My most recent dividend had 11.6 cents/share withheld for the 15% French tax per the US-France tax treaty. This wasn't a transaction tax, it was an income tax, and it definitely isn't added to the share basis.

    It shouldn't be a surprise to get foreign withholding on foreign stock dividends. Most developed nations and many developing nations assess such withholding, usually in accordance with a bilateral tax treaty. Typically these treaties include some sort of relief from double taxation. (That's why we have the Foreign Tax Credit in the US.) The alternative to withholding would be filing income tax returns for all the countries you have investments in. I'll take the withholding, thank you.

    I've never heard of a Tobin tax being assessed on purchases of TOT.
    Dec 30, 2014. 08:31 PM | 1 Like Like |Link to Comment
  • Total: Undervalued Oil Giant With Secure 5% Dividend Yield [View article]

    If your broker files the proper paperwork on your behalf (Vanguard does; I can't speak for any others), France will withhold 15% of your dividend. You can't recover this withholding in a tax-deferred or tax-exempt account, but you can recover all or part of it in a taxable account via the Foreign Tax Credit. You'll also be charged an ADR fee of 0.5 cent/share, taken from each dividend payment.

    Even if you can't recover the 15%, it only reduces the 5% yield to 4.25%, which is still pretty good. But if you've got a choice, put TOT in your taxable account, not your IRA.

    Long TOT.
    Dec 30, 2014. 12:27 PM | 5 Likes Like |Link to Comment
  • Update: As I Said Statoil's Near-Term Headwinds Make The Story Less Compelling [View article]

    My personal opinion is that the current low pricing environment for oil is likely to persist for roughly 2 years. At that point I expect oil pricing to normalize as low prices cure low prices by increasing demand and decreasing supply.

    I own Statoil largely because of its major finds over the past few years: Bay du Nord, Johan Sverdrup, and a major gas find offshore from Tanzania. These finds will take 5 - 10 years to come on line and start producing. I really don't see how low prices today which will likely normalize long before the 5 - 10 year time frame will have any effect at all on the value of these major finds. For a patient investor with a 5+ year time horizon, I consider Statoil an exceptional value at current pricing. I recently added to my already large stake, and will most likely add more as I raise more cash.

    If you want an opinion that is better informed than my own, you need look only as far as the insider trading disclosures. On December 4, board member Jakob Stausholm purchased 17,400 shares, bringing his total share holdings to 50,000 shares. Insiders sell for many reasons, but they buy on the open market for only one.
    Dec 18, 2014. 02:44 PM | Likes Like |Link to Comment
  • Choosing Which Royal Dutch Shell Share Class Is Right For You [View article]

    Information about dividend reinvestment prior to cancellation of the Scrip Dividend Programme is almost certainly out of date now that the SDP has been cancelled.

    When the SDP was in effect, anyone reinvesting dividends via that program received A shares regardless of the share class they held. Dividends on those resulting A shares would then be subject to 15% Dutch withholding, even in an IRA, which is presumably the tax you were referring to. With the cancellation of the SDP, dividend reinvestment, if it occurs at all, would presumably be via a broker's own DRIP. I don't know why a broker's own DRIP would use dividends on B shares to buy A shares. That would seem very strange to me. But if it is happening even after the cancellation of the SDP I would certainly want to know the particulars.
    Dec 16, 2014. 08:15 PM | Likes Like |Link to Comment