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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