Today, I’m looking at the latest 2018/2019 dividend forecasts for the oil majors – Royal Dutch Shell and BP, and the commodity giants – BHP and Rio Tinto.
I review analysts’ dividend estimates on a quarterly basis, as they constantly fluctuate.
All figures are sourced from Stockopedia.
Analysts currently expect Shell (LON: RDSB) to pay the following dividends:
2018 – $1.86 per share
2019 – $1.86 per share
It’s worth noting that those estimates are a decrease from last year’s payout of $1.88. However, with the oil price having risen recently, I can’t see Shell reducing its dividend, so a payout of $1.88 is more likely.
At the current share price of 2,363p, those payouts equate to yields of 5.6%.
Over the last three months, analysts have upgraded their 2018 dividend estimate by $0.03 and downgraded their 2019 estimate by $0.015 (negligible).
Analysts currently expect BP (LON: BP) to pay the following dividends:
2018 – $0.39 per share
2019 – $0.40 per share
It’s worth noting that BP paid out $0.40 for FY2017, so another payout of $0.40 is likely for FY2018, in my view.
At the current share price of 498p, those payouts equate to yields of 5.5 and 5.7%.
Over the last three months, changes to these forecasts have been negligible.
Analysts currently expect BHP (LON: BLT) to pay the following dividends:
2018 – $1.18 per share
2019 – $0.97 per share
At the current share price of 1,389p, those payouts equate to yields of 6.0% and 5.0%. Note the drop from 2018 to 2019. I believe we would only see a dividend cut if commodity prices plummet again.
There have been large upgrades here of $0.25 and $0.15 for 2018 and 2019 respectively over the last three months.
Lastly, analysts currently expect Rio Tinto (LON: RIO) to pay the following dividends:
2018 – $3.04 per share
2019 – $2.68 per share
At the current share price of 3,560p, those payouts equate to yields of 6.1% and 5.3%. Note the drop from 2018 to 2019. As with BHP, I think a dividend cut is only likely if commodity prices fall significantly.
There have been large upgrades here of $0.57 and $0.35 for 2018 and 2019 respectively over the last three months.
Best dividend stock?
Royal Dutch Shell remains my preferred dividend play here.
Shell hasn’t cut its dividend since WW2, and with the oil price back in the high $60s, the chances of a dividend cut are looking much less likely.
The high dividend yields on offer from BHP and RIO look tempting for sure. Yet, it’s important to remember that volatile commodity prices can impact a company’s ability to pay a dividend. In recent years both BHP and Rio Tinto have cut their payouts. For this reason, dividend investors need to be a little careful with stocks in this sector.
Disclosure: Edward Sheldon, CFA owns shares in Royal Dutch Shell.
This article is provided for general information only and is not intended to be investment advice. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.