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Euro on Sunday estimate: lconcerts: Which still to pay dividend in the future Article

Saturday, September 2nd, 2017 | bitcoin updates

by Sven Parplies, Euro on Sunday
A bold announcement: hedge fund manager Pierre Andurand expects the price will rise to $ 100. Currently, one barrel of the raw material costs around half. Not just Andurand's investors would be glad if his bill came up.
lustrians all over the world are in a difficult situation. After the big crash in 2014, the recovery of the price has stalled. The company's profit development is reminiscent of a littered barrel: the three major European companies in the sector – Royal Dutch Shell, Total and BP – earned more than 51 billion dollars in 2012. It was not even eleven billion dollars in 2016.
Above all, dividends are troubled. As a cash source, conglomerates are popular because they cut off a lot of their profits to the shareholders. However, since high investments are also necessary in the operative business, the lieses reach their limits. In the past two years, Royal Dutch Shell, Total and BP have been spending significantly more money than they have earned. This relativizes the attractive indices of energy stocks.
Shell and BP are based on analyst forecasts on dividend yields of almost seven percent, total on significantly more than five percent. However, many investors fear that the distributions can no longer be financed in the long term.

Dividend with side effect
Already the conglomerates have to fight. In order to protect the balance sheets, they offer their shareholders the opportunity to take new shares instead of the usual cash dividends. According to the Bloomberg data service, the three big Europer have cut more than a third of their financial burden from the dividend. This brings relief in the short term, but has side effects. In the case of an increasing number of shares, the value of the individual securities is diluted. In addition, the company must pay dividends in the future for a larger number of shares. According to Deutsche Bank statistics, 40 percent of the companies that offered shares in 2012 instead of cash had to cut their dividends within the next three years. The lieses will spare themselves this kind of demeanor.
The industry is used to extreme cycles and is experiencing a reduction in costs. In the past, the upturn in economic activity has always driven up prices and share prices again. There was good news for the summer season: at a price of $ 50 per barrel, Shell, Total and BP can finance their spending from their own cash flow due to the recent cuts.
Basic problems remain. The shale gas revolution in the USA means that the supply on the world market is significantly greater than in earlier cycles. Attempts by the Arabian, in particular, to support the prices by means of subsidy restrictions, have run in the sand. In the long term, the problems could become even bigger. Wind and solar energy are becoming increasingly popular. In the car industry, the internal combustion engine is forced to be displaced by the electric drive. Shell CEO Ben van Beurden has already lowered its shareholders to long-term low prices ("lower forever"). BP financial director Brian Gilvary sees the price of the raw material in the coming year between 45 and 55 dollars – likewise likewise far from the old records.

Arguments for $ 100
The International Energy Agency, an organization of 29 industries, expects that demand will not reach its peak until the year 2040. Until then, demand will continue to increase as a result of freight transport, aviation and the chemical industry, and more than compensate for falling demand in other areas. In the meantime, new conglomerates are opening up new business areas. Royal Dutch Shell is expanding its natural gas business and is building a large wind farm in the Netherlands. Totally has taken over the battery manufacturer's juice and thus sets the breakthrough of the electric car.
These steps alone are not enough to free themselves from the dependence on the price. However, this is not necessary at all. Fund manager Andurand, according to the Financial Times, does not believe that the negative effect of electric cars or production capacity is big enough to justify a consistently low price.
The current sentiment sees Andurand as a contraindicator and reminds of optimism before the crash: "In 2014, after four years with prices of $ 110 a barrel, most analysts have said that we will never see prices below $ 100 become."
Investor Info

The British-Dutch group has pumped the cash flow in the second quarter to the highest level since the 2014 lpreiscrash. Cost reductions, the sale of less attractive business areas, and the takeover of the BG Group specializing in the retail sector have helped. The underlying conditions remain difficult, but at the current price level the dividend should be affordable. The stock remains the editor's favorite. Investors need patience.

Energy is this year the worst sector in the global equity index MSCI World. If the price would turn up, the industry would have catching up potential. With a Lyxor index fund, investors can invest in the 89 companies of MSCI World Energy. The heavyweights in the index are Exxon Mobil, Chevron and Royal Dutch Shell. Dividends are automatically reinvested for this product.

Anyone looking for a high payout but wanting to avoid the extremes of the commodity sector can rely on broad-based dividend funds such as the Allianz European Equity Dividend. The energy sector was last weighted 14 percent, including Royal Dutch Shell. Grte Brocken were financial and telecoms. The fund will deduct dividends. The dividend yield was last at 4.7 percent. Image sources: mosista / Shutterstock.com, meepoohfoto / Shutterstock.com, cherezoff / Shutterstock.com, sacura / Shutterstock.com


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