Up 20% in 11 weeks, the Shell share price is motoring

The Shell share price has leapt by almost a fifth in under three months. Despite this surge, shares in the FTSE 100’s largest firm don’t look expensive.

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This year has seen a positive start for major stock markets. The S&P 500 index is up 9.4% in 2024, while its tech cousin Nasdaq Composite has racked up an 8.6% gain. However, the UK’s FTSE 100 has added a mere 2.7%. Meanwhile the Shell (LSE: BP) share price has easily beaten this wider index.

The shares surge

On 29 December 2023, Shell stock closed at 2,571.5p. It then quickly lost momentum, falling steadily to close at 2,361.5p on 22 January. In just over three weeks, the share price was down 210p, or 8.2%.

Since its 2024 lows, the share price has rebounded strongly. As I write, the stock trades at 2,820.95p, valuing this oil & gas Goliath at £181.5bn. This makes this business the largest Footsie firm.

So far, the shares have rebounded by almost a fifth, leaping 19.5% from their January low. Here’s how this widely held stock has performed over six periods:

Five days+5.9%
One month+14.1%
Six months+6.5%
YTD 2024+9.7%
One year+16.1%
Five years+13.8%

As well as showing recent upwards momentum, the Shell share price has risen over all six timeframes, ranging from one week to five years. What’s more, it’s comfortably beaten the wider Footsie over all these periods.

Of course, what’s driven the shares up this year is the rising oil price. For example, the cost of a barrel of Brent crude has gushed upwards by 19% in 2024 so far. This has happened due to rising global instability, especially in the Middle East.

Shell’s delicious dividends

The above figures exclude dividends, which produce a large slice of the long-term returns from FTSE 100 shares. Indeed, the index itself has a cash yield of 4% a year, beating the income from other major indices.

Today, Shell shares offer a historic dividend yield of 3.6% a year, but its cash payouts are on the rise. Yearly dividends have increased from $0.89 for 2021 to $1.04 for 2023 to $1.29 for 2023. That’s a hefty uplift of 44.9% over two years.

Of course, future dividends are not guaranteed and can be cut or cancelled without notice. But with dividends covered 2.2 times by trailing earnings, future payouts look pretty safe to me.

What next?

Decades of experience have shown me that energy stocks can be very volatile, with energy and commodity prices even more unstable and difficult to forecast. Thus, I will make no predictions for the Shell share price.

That said, the stock did hit a fresh 52-week high on Monday, 8 April, peaking at 2,825.5p. It could have even further to go, especially if global geopolitics send the oil price gushing higher. But who can say?

Nevertheless, to reduce global CO2 emissions, we need to stop burning fossil fuels. This means Shell must evolve into a low-carbon, renewables-based business. But this process could take several decades, so I’ve added Shell to my stock watchlist today for further review!

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 assessed. Consider taking independent financial advice.

Cliff D'Arcy has no position in any of the shares mentioned. 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.

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