Despite these troubles, Graham Spooner, investment research analyst at The Share Centre recommends Shell shares as a contrarian buy.
“Investors should note that the majority of analysts’ are expecting results to be $1.8bn as the average estimate,” Spooner said. Royal Dutch Shell also said this morning that it remains confident of declaring $1.88 per share dividend for 2015 and at least the same in 2016.”
Investors should appreciate that Royal Dutch Shell has made a commitment to reduce costs and improve efficiency which should be supportive of its balance sheet. “As a result of the above factors, we recommend Royal Dutch Shell as a ‘buy’ for the contrarian investor looking to benefit from a longer term recovery in the oil price. The income is attractive but investors should be aware that there is a possibility of the dividends being cut.”
