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Total SA: The Last Surviving European Oil Dividend

Aug. 08, 2020 7:28 AM ETTotalEnergies SE (TTE)32 Comments
DT Analysis profile picture
DT Analysis


  • Following BP and Royal Dutch Shell both reducing their dividends, Total SA is left with the last surviving European oil dividend.
  • On the downside, their dividend coverage is likely to remain weak at best until there is a sustained recovery, after which they should have no issues.
  • Thankfully their moderate leverage provides them with scope to continue funding any cash shortfalls with debt during the next year whilst awaiting a full recovery.
  • Their strong liquidity further boosts this ability and removes any risk of them being forced to take hasty value-destructive actions like equity raising or panicked asset sales.
  • Whilst their dividend is still risky, I believe that they are likely to manage to sustain it throughout this downturn, and thus maintaining my bullish rating seems appropriate.


The list of surviving dividends from the oil and gas industry is getting very small, especially in Europe after both BP (BP) and Royal Dutch Shell (RDS.A) (RDS.B) reduced their dividends. This has left the often underfollowed French major, Total SA (TOT) with the last surviving European dividend in the oil and gas industry with a high yield of around 7.50%, which begs the question of whether they are the next to succumb to the pressure.

Executive Summary & Ratings

Since many readers are likely short on time, the table below provides a very brief executive summary and ratings for the primary criteria that were assessed. This Google Document provides a list of all my equivalent ratings as well as more information regarding my rating system. The following section provides a detailed analysis for those readers who are wishing to dig deeper into their situation.

Total SA ratings

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There are significant short- and medium-term uncertainties for the broader oil and gas industry; however, in the long-term, they will certainly face a decline as the world moves away from fossil fuels.

Detailed Analysis

Total SA cash flows

Total SA notes 1

Image Source: Author

Instead of simply assessing dividend coverage through earnings per share, I prefer to utilize free cash flow since it provides the toughest criteria and best captures the true impact to their financial position. The extent that these two results differ will depend upon the company in question and often comes down to the spread between their depreciation and amortization to capital expenditure.

The impacts from this Covid-19 inspired downturn are easily apparent with their operating cash flow decreasing 51.64% year on year during the first half of 2020, or 60.27% once the impacts of working capital movements are removed. This sits slightly better than BP, which saw an equivalent decrease of 68.95% year on year, but was materially beaten by Royal

This article was written by

DT Analysis profile picture
I am no longer active, as I am taking a hiatus from finance to pursue business ventures in other sectors.  I hope that my analysis was helpful to investors across the years, thank you.

Analyst’s Disclosure: I am/we are long BP, RDS.B. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (32)

Hello, I own Total SE shares with IB, I live in Europe, I pay 28% withholding tax instead of 12.8%, which I find unacceptable. I understand it has to do with the fact that the ownership of the shares is undisclosed by IB to the French tax authorities, so that they apply the 28% rate which is meant for French residents. Can anyone suggest me a European broker or bank where I will pay the "right" 12.8%?. Thanks everyone

You pay 30% withholding tax on French dividends!!

Then scroll down to > > > > Dividends paid to non French residents

Dividends paid to individuals who do not reside in France are subject to a withholding tax at the 12.8% upper rate.
The Last Surviving European Oil Dividend

Not quite correct. Any European oil company pays dividends despite the fact BP and RDS slashed its dividends this year.
TOT is a complex company! i doubt really the sum of all their existing investment is profitable starting with SAFT.
Pitivier profile picture
28 billion in cash, it's the best in Europe with RDSB, I have it in my PEA
robbins profile picture
A good read. Withholding tax an issue for most.
Mitridates profile picture
Repsol still didn't cut the dividend
@Mitridates Repsol pays with new shares (scrip dividend), which is a very bad capital allocation whe the shares are so low. Paying with shares is a big red flag for me
Tango Cash profile picture
Funny enough the article doesn't mention two other European major who cut their dividends recently - Eni and Equinor. There's one more holdout besides Total, though - Repsol still hasn't announced a dividend cut (although I assume they eventually will).
robbins profile picture
@Tango & Cash He covered Equinor a while ago
fortbrepoels profile picture
TOT have more business in GAZ than RDS and BP

the FRANCE TAX = 12;5% @PapaWhisky
Tango Cash profile picture
RDS has a bigger gas business than Total. That's even acknowledge in the Total's own investor resources. The withholding tax in France is actually 28%, so you'll have to deal with some paperwork if you want to recoup some of those taxes.
Tango Cash profile picture
Small clarification - the withholding tax is 28% unless you're lucky enough to use a broker that applies the tax treaties between your country and France automatically, which mine (Interactive Brokers) doesn't.
Vanguard does.
PapaWhisky profile picture
Also, don’t forget that your Total dividend is taxed in France before the money even gets to your account
Tango Cash profile picture
Yep - 28% ain't pretty. :-) Still, I'm long TOT.
I believe there's a tax treaty between France and the US. I use TDA andI've only seen my dividends taxed 12% before it's deposited in my account. Check with your broker to see if they've filed the necessary paperwork.
Tango Cash profile picture
I'm not based in the US (I'm in the EU), and unfortunately the broker I use (Interactive Brokers) applies tax treaties automatically only for US and Canadian stocks. If I want to reclaim the tax I have to submit some paperwork, which is not worth it for my relatively small TOT holding.
My experience: in 9 out of 10 cases following the bull case I ended up with 10 - 20% paper loss.
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