Stock market

By 20 percent in 11 weeks, Shell’s share price is rising.

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This year has seen a positive start for the major stock markets. gave S&P 500 The index is up 9.4 percent in 2024, while its tech cousin Nasdaq Composite There is an 8.6 percent increase. However, of the UK FTSE 100 It has increased by just 2.7%. mean while Shell (LSE: BP) share price has easily beaten the broader index.

Increase in shares

On 29 December 2023, Shell stock closed at 2,571.5p. It then lost momentum sharply, falling steadily to close at 2,361.5p on 22 January. In just three weeks, the share price was down 210p, or 8.2%.

Since its 2024 low, the share price has rallied tremendously. As I write, the stock trades at 2,820.95p, valuing this oil and gas goliath at £181.5bn. This makes the business the largest firm in Footsie.

So far, the shares have recovered to about a fifth, jumping 19.5 percent from January’s lows. Here’s how this widely held stock has performed over six periods:

Five days +5.9%
one month +14.1%
Six months +6.5%
YTD 2024 +9.7%
a year +16.1%
Five years +13.8%

In addition to showing recent upward momentum, Shell’s share price has risen in all six time frames ranging from one week to five years. Moreover, he has comfortably beaten wide footies in all these periods.

Of course, what has driven shares this year has been rising oil prices. For example, the price of a barrel of Brent crude has risen by 19% so far in 2024. Such global instability has been caused by growing instability, particularly in the Middle East.

Shell’s delicious profits

The figures above exclude dividends, which generate a large chunk of long-term returns from FTSE 100 shares. In fact, the index itself has a cash yield of 4% a year, which beats returns from other major indexes.

Today, Shell shares offer a historical dividend yield of 3.6% annually, but its cash payout is growing. The annual dividend has increased from $0.89 for 2021 to $1.04 for 2023 to $1.29 for 2023. This is a whopping 44.9% growth in two years.

Of course, future profits are not guaranteed and may be cut or canceled without notice. But with 2.2 times the dividend covered by past earnings, future payouts look pretty safe to me.

What next?

Decades of experience have shown me that energy stocks can be very volatile, energy and commodity prices even more volatile and difficult to predict. As such, I will not make any predictions for Shell’s share price.

That said, the stock hit a new 52-week high on Monday, April 8, reaching 2,825.5p. It may have to go even further, especially if global geopolitics sends oil prices higher. But who can say?

Nevertheless, to reduce global CO2 emissions, we need to stop burning fossil fuels. This means Shell must transform into a low-carbon, renewable-based business. But this process can take decades, so I’ve added Shell to my stock watch list today for further review!

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