This Blue Chip is a growth and income energy leader

December 17, 2018

Harvest Exchange Traded Funds

Blue Chip stocks have features that set them apart from other companies.

In good times they prosper and in the bad times, they suffer least when conditions change – which is where they get their name.  The term evolved on Wall Street in the early 1900s where brokers also liked to play cards. The poker playing conventions of the day used white, red and blue chips, with blue carrying the highest value.

The term has evolved to describe high-quality stocks that do well in any climate, offering the potential for long-term growth as well as safety and stability in volatile times.

Blue Chips usually have a track record of rising growth and profits. They tend to be among the leaders of their industries with business models that have been proven over time to work. They have strong balance sheets, manageable debt and competent, focused management. They almost always pay dividends year after year.

Royal Dutch Shell plc (NYSE: RDSa) fits this description.  The company, commonly known as Shell, explores and extracts oil, natural gas, and natural gas liquids and also refines and markets petroleum products. Shell was founded in the Netherlands in 1907 and is now a British-Dutch giant with operations in 70 countries. It is one of six so-called oil and gas “supermajors.” It is the seventh-largest company in the world by revenues, as ranked by Fortune magazine and had 2017 net income of US$12.97 billion. At current share prices, its market capitalization exceeds US$250 billion.

Photo: Courtesy Shell Global

 

In Canada, Shell has 4,000 employees and 1,300 gas stations coast to coast, as well as refineries in Ontario and Alberta. It also explores for oil and gas in Alberta.

Shell has not cut its dividend since the end of World War II which is extremely rare in any company,  let alone one in a cyclical industry. The current US $0.94 annual dividend payment yields  6.4% based on its New York closing price on Fri. Dec. 14, 2018.

The payment has not increased since the onset of the oil downtown in 2014, but as energy prices recover,  Shell is well positioned to continue rewarding shareholders.

Royal Dutch Shell is a top holding of the Harvest Portfolios Group Harvest Energy Leaders Plus Income ETF (TSX: HPF, HPF.U). The Fund holds 20 equally weighted, dividend-paying stocks with a minimum market capitalization of US$10 billion and operations in at least two countries.  The Fund’s objectives are to provide a monthly cash distribution, capital appreciation and a lower volatility than would otherwise be experienced by owning the stocks. – AM

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The views and/or opinions expressed in the blog are of a general nature and are for informational purposes only. Blog contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage personal investment strategies. Investors should consult their investment advisor before making any investment decision.    

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Disclaimer

For Information Purposes Only. Commissions, management fees and expenses all may be associated with investing in HARVEST Exchange Traded Funds (managed by Harvest Portfolios Group Inc.) Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Tax, investment and all other decisions should be made with guidance from a qualified professional.

Certain statements in the Harvest Blog are forward looking Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or  “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS.

Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.

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