Shell (NYSE: SHEL) has made a significant move that has prompted a re-evaluation of its standing among oil majors. The company recently announced plans to expand its Canadian liquefied natural gas (LNG) export operations, a decision that comes roughly six years after it cut its dividend in 2020. This expansion is seen as a strategic shift back to traditional energy investments, following a brief foray into clean energy initiatives that ultimately did not materialize.
The author of the article, who previously removed Shell from their list of considered energy stocks due to the dividend cut and subsequent clean energy missteps, now believes the company has regained its footing. Shell has reduced its leverage and is focusing on the natural gas segment, which is increasingly important as a transition fuel. The company's decision to double the export capacity of a large Canadian LNG facility is timely, given the current geopolitical tensions and the need for energy security.
While Shell is back on the author's list of potential investments, it is not at the top. TotalEnergies (NYSE: TTE), which maintained its dividend and continued investing in clean energy, remains the preferred choice. Chevron (NYSE: CVX), with its higher dividend yield and stronger dividend history, is also favored over Shell. However, Shell's well-above-market 2.9% dividend yield and reduced leverage make it a worthy consideration, particularly for those willing to overlook the 2020 dividend cut.
The article concludes by noting that Shell is now back on the list of integrated energy stocks to consider owning, though it may not be the top pick. The author emphasizes the importance of Shell's strategic moves in the natural gas sector and its commitment to regaining investor confidence.