I’d buy more Royal Dutch Shell shares in 2022. Here’s why

It is a great time to be an investor in oil stocks like Royal Dutch Shell, as Manika Premsingh has experienced recently. But the best might be yet to come. 

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman touching on number 2022 for preparation

Image source: Getty Images

If we continue to recover from the pandemic in 2022, I expect oil stocks to come out ahead. Specifically, well-established FTSE 100 ones like Royal Dutch Shell (LSE: RDSB). Oil is closely linked to the fortunes of the economy. Especially now, when the slowdown has gone hand-in-hand with severe travel restrictions. It is only logical then, that as we are allowed to move around more, there will be even bigger demand for oil. 

Buybacks could lift Royal Dutch Shell shares

Crude oil prices have largely been rising since November 2020, when vaccines were first developed, leading to optimism about the future of business. In line with that, oil stocks have done well too. And I reckon they will continue to do so. In fact, just yesterday, Shell said that it will carry out share buybacks “at pace”. This is quite likely to be good news for existing shareholders, since fewer Royal Dutch Shell shares in the market could push up the price.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Higher than average dividend yield for a FTSE 100 stock

Also, I like the company’s dividend prospects, which too could be positive for the share price. Right now, its dividend yield is 3.5%, which is slightly higher than the FTSE 100’s yield of 3.3% anyway. But if it continues to see an oil price bonanza they would probably rise more. Considering that its current dividend payouts are a fraction of what they were pre-pandemic, it is not farfetched to think that they could rise more. I am increasingly tilting towards investing for a passive income, so this is a big reason for me to consider buying more of Shell shares in 2022. 

Oil is going out of vogue

But as is often the case with stocks, where there are rewards, there are some risks. And this FTSE 100 stock is no different. Oil stocks are divisive right now. On the one hand, we need oil to survive and even grow. On the other hand, polluting fuels are really bad for the planet’s and our long-term future, as we know all too well. For this reason, we also know that they will be on their way out over the course of this decade. 

Oil biggies are now recreating themselves as clean energy providers. How far they succeed in doing so, remains to be seen. For this reason, I believe I have to actively monitor my oil-related investments.

What I’d do

As an investment writer, it is relatively easy for me to monitor my investments. But if I were engaged in a completely unrelated field, I might struggle to do so. This is a potential drawback of the stock. Instead, I would then prefer buying stocks I do not have to worry too much about for the next 10 years. But I do also believe that the returns from a stock like Shell could be big enough in the next three to five years to justify staying up to date with them. I continue to maintain that I will buy more of the stock this year. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Manika Premsingh owns Royal Dutch Shell B. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Social media and digital online concept, woman using smartphone
Investing Articles

Will Lloyds shares recover in 2022?

Lloyds shares have struggled this year and the looming recession won't help. But I'd still buy them today.

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Investing Articles

Can the stock market make me rich even now?

Here are three ways I'm coping with the stock market's recent bout of weakness and aiming to build wealth in…

Read more »

Cogs turning against each other
Investing Articles

3 top investment trusts to buy right now

Investment trusts offer a wide range of options for investors. And in troubled times, they provide some safety through diversification…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Why hasn’t the FTSE 100 crashed in 2022?

The catastrophic events of 2022 have left investors around the globe fearing the worst for stock markets. And some have…

Read more »

Trader on video call from his home office
Investing Articles

2 inflation-resistant FTSE 100 stocks to buy today

Soaring inflation could dent my returns if I don't take care. Here are two top inflation-resistant FTSE 100 stocks I'd…

Read more »

Tabletop model of a bear sat on desk in front of monitors showing stock charts
Investing Articles

Why a bear market is an investor’s best friend

A bear market can certainly be scary. But any investor tempted to sell might benefit by looking at Warren Buffett's…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price could be stuck below £1 for a while. Should I buy?

The Rolls-Royce share price has been trading at penny stock levels since April. Could the stock be a bargain at…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’m aiming to make £45,000 in passive income with UK shares and never work again!

Investing regularly in UK shares can generate a substantial passive income over the long run. Zaven Boyrazian demonstrates how.

Read more »