Advertising. Royal Dutch Shell stock has been an absolute dividend hunter’s favorite for many years. The quarterly payment of US $ 0.47, which was kept stable for a long time, ensured an attractive dividend yield that was even double-digit for a short time. This was valid until the end of April 2020, when the company announced that it would cut the dividend for the first time since 1945 – by two thirds! The reason for this was that the so-called adjusted surplus had almost halved due to the corona pandemic and the price war on the oil market. Faced with a very uncertain outlook for the development of demand, the company management did not consider it sensible to maintain the distribution level. Instead, due to ongoing economic upheavals, very low raw material prices, the spectacular turbulence on the US oil market with at times negative prices and the high volatility, more security and, above all, liquidity were relied on. The company now has an additional $ 2.5 billion available every quarter.
In the months that followed, the skepticism of the capital market increased significantly and the share was listed at the beginning of November as low as it had been in 25 years. By this time, however, some crisis management measures had already taken effect. In the second quarter of 2020, despite depreciation amounting to 22 billion US dollars, the adjusted previous year’s surplus was not exceeded, or at least the low analyst expectations were exceeded. It did so because the downstream business, which includes the transportation, processing and distribution of oil, was far more successful than most equity experts expected. At the end of September it was announced that targeted 9,000 job cuts and other measures would save up to 2.5 billion US dollars annually. And oil prices no longer caused any additional interference.
After another solid third quarter, in which the analysts’ estimates were exceeded in terms of both operating cash flow and adjusted after-tax earnings, it was decided to take an additional confidence-building measure in the capital market: the quarterly dividend, which had been drastically reduced six months earlier, was increased slightly by four percent to $ 0.1665, signaling confidence that the worst is now behind us. This signal caught and the stock was able to gain significantly from its lows.
However, the company continues to be exposed to the disparity in capacities in raw material (crude oil, natural gas) and product provision (fuels, petrochemical products) on the one hand and the demand reduced by Covid-19 on the other. A security-oriented and even up to 30 percent forgiving stock price investment could therefore be an interesting alternative right now. This applies in particular to investors who are looking for attractive interest rates.
3.10 percent p.a. fixed rate and quick partial repayment after one year
The DekaBank 3.10% Royal Dutch Shell DuoRendite Reverse Convertible Pro 02/2023 (WKN DK0ZGQ) pays 3.10 percent interest based on the nominal amount of 1,000 euros after one year. At the same time, the investor receives half of the nominal amount (500.00 euros) back regardless of the market. The remaining nominal amount portion (500.00 euros) will continue to bear interest at 3.10 percent in the following period and will also be repaid in full if the registered ordinary share of Royal Dutch Shell Plc for the final valuation on January 27, 2023 is at or above the barrier (70 , 00 percent of the start value) closes.
If this is not the case, there is a risk of losses on repayment because instead of the second half of the nominal amount, registered ordinary shares in Royal Dutch Shell Plc that have decreased in value are transferred to the investor at 100 percent of the starting value. As with any bond, the issuer risk must also be considered. This means that, especially in the event of DekaBank’s insolvency, there is a risk of losses or even total loss.
The subscription runs from January 11, 2021 to January 29, 2021, subject to an extension or shortening.
Would you like to receive the column and further information on DekaBank certificates directly by email in the future? Then register for our certificate newsletter right away: at https://www.deka.de/zertifikate/newsletter-anmeldung
Disclaimer: The information contained herein does not constitute a recommendation to buy or sell the financial instrument and cannot replace individual advice. This advertising information does not contain all relevant information about this financial instrument. Before making an investment decision in certificates, potential investors are advised to read the securities prospectus in order to fully understand the potential risks and opportunities of the investment decision. The approval of the prospectus by the competent authority is not to be understood as an endorsement of the securities offered. The securities prospectus and any supplements can be found at https://www.deka.de/deka-gruppe/wertpapierprospekte under the tab “EPIHS-I-20”, the final terms at https://mmscache.deka.de/DE000DK0ZGQ2_FT.pdf downloaded. All securities information and the current key information sheet are also available from your Sparkasse or DekaBank Deutsche Girozentrale (www.deka.de), 60625 Frankfurt available free of charge. You are about to acquire a product that is not easy and can be difficult to understand.
If courses / prices are mentioned, these are non-binding and do not serve as an indication of tradable courses / prices. The values given here serve to explain the payout profile of this financial instrument. The values are not a reliable indicator of future performance.
Sales restrictions: Reference is made to special sales restrictions and sales regulations in the various legal systems. In particular, the financial instruments described herein may not be offered for sale or purchase within the United States of America or to or for the benefit of U.S. persons.
Awarded four times – DekaBank’s certificate business. The top placements in the most important awards in the German certificate market underscore the excellent quality of the DekaBank certificate range. More information at www.scope-awards.com/award-2021/zertifikate/gewinner1 as well as under www.zertifikateawards.de
As Head of Private Banking and Product Management at the Deka Group, Hussam Masri is responsible for product development and product management of mutual securities funds, asset management and pension products, certificates and private banking.