Shell assures investors: Dividends will be protected

Royal Dutch Shell Plc CEO Ben Van Beurden said that the company will try its best to make sure investors will still receive dividends amid the low oil price. The statement was released by Van Beurden in an email to investors.

Bloomberg reported that besides protecting investors' dividend, the company will also move forward with their plan to buy back shares. The shares buyback will help Shell to protect their stock especially as analysts are projecting that the oil price will continue to go lower in the coming years.

Van Beurden said, "Shell is pulling out all the stops to safeguard our dividends and buyback program, and to keep our investment program steady for the future."

The company has been giving out dividend without fail for seven decades and it is not planning to do so this year too.

Shell's dividend for 2015 is not announced yet, but Interactive Investor said that the company is expected to pay out 93 percent of its profit as dividend. As of September 28^th, its annual dividend yield reach the highest value in 20 years at 8.1 percent. The yield is higher than the FTSE 100 Index benchmark of 4.1 percent.

Currently, the company is trading at the price-to-earning ratio of 12.8 which is still considered good even with dividend payment. However, the company's shares had dropped more than 29 percent this year alone mainly due to the low oil price.

The plan is possible to be carried out as Shell's debt-to-equity ratio is still in a great condition. This as the company had taken early precautionary steps when oil first starts to drop last year.

The company had even cut off workers and reduced new exploration while focusing only in rigs with huge potential. Shell is also expecting to reduce its operating cost by 10 percent or $4 billion this year including reducing capital expenditure by 20 percent.

Besides announcing the plan, Van Beurden who acknowledge the low oil price had put a pressure on the company also said that Shell is ready to shift focus to enable them stay strong in the business.

The Wall Street Journal reported that Shell is almost done with their acquisition of BG Group which will enable Shell to enter the liquefied natural gas sector. The acquisition is expected to be worth around $70 billion.