Royal Dutch Shell (LON: RDSB) and Unilever (LSE: ULVR) are two very popular FTSE 100 dividend stocks. Both reported full-year results this week. Here’s a look at the dividend declared by each company.
Royal Dutch Shell
Shell held its Q4 dividend steady at 47 cents, taking the full-year FY2017 payout to $1.88 per share. This is what I expected. The consensus dividend estimate for FY2017 was a little lower than that, at $1.84, yet with the oil price back up near $70, I was pretty confident that Shell would pay the same payout as last year. At the current share price, that payout equates to a yield of a mighty 5.5%.
Both earnings and cash flow for the year were up significantly. Basic current cost of supply (CCS) earnings per share excluding identified items came in at $1.92. That’s a rise of 109% on FY2016. Operating cash flow rose 73% to $35.7bn while free cash flow climbed to $27.6bn, up from minus $10.3bn the year before. That level of earnings doesn’t provide much dividend coverage, however, with the payout of $1.88 per share costing the company $15.6bn per year, the dividend is comfortably covered by free cash flow. That’s reassuring for income investors.
Looking ahead, the current consensus dividend estimate for FY2018 is $1.83, implying a small cut. However, barring a dramatic oil price collapse, I can’t see this happening. The oil major said that it plans to announce another 47 cent payout for Q1 2018, so another full-year payout of $1.88 looks likely, to my mind.
Unilever announced a fourth-quarter dividend of €0.3585, taking the full-year FY2017 dividend to €1.43. That’s up 11.7% from the FY2016 payout of €1.28, and up 47% from the FY2012 payout of €0.97. Decent dividend growth there.
Overall, results looked pretty solid. Underlying sales growth excluding spreads was up 3.5%. Underlying earnings per share rose 10.7% to €2.24. That gives a dividend coverage ratio of 1.56.
Looking forward, City analysts expect a dividend of €1.55 for FY2018 and a dividend of €1.70 for FY2019. At the current share price of 4,040p, those estimates equate to yields of 3.4% and 3.7% respectively.
Disclosure: Edward Sheldon, CFA owns shares in Royal Dutch Shell and Unilever.
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.