My Philosophy On Long-Term Oil Investing

Royal Dutch Shell pays out a dividend of $0.94 per quarter, or $3.76 per year. The price of the stock currently sits at $69.83 per share, an inch above the company’s fifty-two week low price of $68.29 that was reached during Friday’s trading. I find it to be a chronically underrated company, with annual returns of over 14% from 1914 through 2014 and over 11% annual returns since having globally scaled operations in 1986.

It is also a company that has served an important purpose in helping me develop and improve my overall understanding of investing, as Royal Dutch Shell had cut its dividends six times over the course of delivering 14% annual returns during the past century—the story of long-term oil investing success is one of peaks and valleys, with each decade’s peak being larger than the one reached during the previous business cycle. Because commodity prices fluctuate, often abruptly and with little discernible warning in advance. Where companies like Coca-Cola, General Mills, Colgate-Palmolive, and Hershey reliably grow profits annually for every nine years out of ten, oil stocks have a business model guaranteed not to do this.

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