Shell cutting dividends: historic move

Shell cutting dividends: historic move

The almost non-existent demand for Oil led Shell to cutting its quarterly dividends.

A shocking move came last week from one of the world’s biggest oil companies.Royal Dutch Shell cut its quarterly dividends for the first time since World War II. The cut came as a response to the massive drop in demand since the pandemic started. From the usual 47 cents, it cut down to 16 cents per share. The cut could be in force until next year. It is even more shocking, as the company was the biggest corporate dividends payer.

JP Morgan analysts believe this is a necessary and also prudent move that can allow Shell to carry on with its plans regarding the zero-carbon emissions.

Shell reported a loss of $24 million for the first trimester of 2020. During the same period last year, it reported a net profit of $6 billion.

The cutting of dividends came as a last resort for the company to preserve cash, as there is no demand from factories, airlines, and such. The cut will release approximately $10 billion, which in the long-term will be invested in the zero-carbon energy sector, which is planned to be reached by 2050.

The EAI compared this year's energy drop in demand to annulling India as a consumer, being the world's third. The only sector still going strong isrenewable energy.

During the previous trading session, the stock price dropped by 8%.

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Sources: edition.cnn.com, bbc.com, finance.yahoo.com

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