Shell dividend climbs 5% following strong Q1 financial performance
Shell reported a strong first quarter, with adjusted earnings the company’s definition of net profit, rising to $6.92 billion.
The figure, announced Thursday, significantly surpassed both the $5.58 billion reported a year ago and the analyst consensus of $6.36 billion.
Shell plc is also set to return $3.0 billion to shareholders after announcing the immediate commencement of a new share buyback program that is expected to run for approximately three months.
Shareholder distributions and capital return
The energy giant, with a market capitalisation of $245 billion announced the buyback move while the stock’s P/E ratio is 14.58, and an analysis by InvestingPro suggested it is currently trading below its Fair Value.
“Today, consistent with our value driven capital allocation philosophy, we are rebalancing our shareholder distributions, with a $3 billion share buyback programme for the next 3 months and a 5% increase in the dividend, in line with our existing 40-50% of CFFO distribution policy,” Shell’s Chief Executive Officer, Wael Sawan said in an official statement.
The program aims to reduce Shell’s issued share capital by repurchasing and subsequently cancelling all the acquired shares.
The company’s goal is to complete this program, which remains subject to market conditions, prior to the announcement of its Q2 2026 results.
The company currently offers a 3.41% yield and has sustained dividend payments for 22 consecutive years.
Shell has engaged a single broker under a non-discretionary contract for the buyback program.
This contract facilitates the purchase of its ordinary shares on London market exchanges, including the London Stock Exchange, BATS, and Chi-X.
The program is authorised to run until July 24, 2026, with a maximum aggregate expenditure of $3.0 billion.
The broker will execute purchases of Shell’s securities within the contractually agreed parameters, acting independently of the company in making trading decisions.
These transactions will be carried out in line with Shell’s authorisation for on-market share repurchases.
The maximum number of ordinary shares that may be bought under this program is 320 million, which represents the full remaining capacity permitted by the authorities granted by shareholders at the company’s 2025 Annual General Meeting.
Operational performance, capex and geopolitical impact
Shell plc reported strong operational performance across its portfolio, which led to higher contributions from trading and optimisation activities.
Source: Shell
The company’s cash capital expenditure (capex) outlook for 2026 is projected to be between $24 and $26 billion, which included approximately $4 billion for the acquisition of ARC Resources.
The capex outlook for 2027 to 2028 remains unchanged at $20 to $22 billion.
The ARC Resources acquisition is expected to add 370,000 barrels of oil equivalent per day to production, resulting in a 4% Compound Annual Growth Rate (CAGR) from 2025 through to 2030, according to the official release.
Additionally, Shell maintains a resilient balance sheet, with gearing at 23% (including leases), primarily reflecting an increase in working capital due to the current price environment.
Shell’s oil and gas production decreased by 4% in the last quarter.
This decline was attributed to the US-Israeli war on Iran, which led to damage, including to the Pearl gas plant in Qatar.
Repairs for the Qatari plant are estimated to take approximately one year.
Shell’s gearing, or debt to equity ratio including leases, rose to 23.2% from 20.7% at end-2025.
The company had flagged higher debt due to managing price and supply disruptions and volatility due to the war, having previously said it was very comfortable with the ratio at 20%.
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