Are Royal Dutch Shell plc and Lloyds Banking Group plc genuinely great dividend stocks?

Despite broker expectations of a sustained earnings fightback at Royal Dutch Shell (LSE: RDSB), the extreme strain on the firm’s balance sheet isn’t expected to get dividends firing again quite yet.

The black gold giant kept the annual payout at 188 US cents per share in 2016 for the third consecutive year, and is predicted to keep rewards around this level until the end of this year at least.

Many income chasers will still be drawn in by a subsequent yield of 6.4%. But investors should bear in mind that the predicted dividend comes in fractionally below predicted earnings of 195 US cents per share. And should expectations of a heady oil price ascent fail to come to fruition, then Shell’s anticipated 85% bottom-line uptick could look rather optimistic.

A further build in the US rig count has seen investor appetite for Shell moderate in recent weeks, the latest report from Baker Hughes showing the number of units in operation up for 12 weeks out of the past 13. The rig total now stands at 15-month peaks, and further rises can be expected, keeping already-abundant stockpiles close to overflowing.

Sure, the producer may remain committed to reducing capex budgets and stringing asset sales out to mend its debt-heavy balance sheet and continue paying generous dividends. Indeed, the company announced the divestment of assets in Thailand and the North Sea for $4.7bn last month.

But Shell’s high levels of gearing means that a sustained improvement in black gold values are essential to ensure Shell remains lucrative dividend stock in the years ahead. And I for one remain unconvinced that the oil market imbalance is on the verge of disappearing.

Payouts in peril?

I’m also less-than-enthused by the dividend outlook over at Lloyds Banking Group (LSE: LLOY).

City brokers expect the banking giant to lift the dividend to 2.9p per share for 2016 before raising it again in the current period, to 3.5p in 2017. Consequently Lloyds boasts a considerable 5.3% yield.

However, I believe the Black Horse may struggle to meet these enthusiastic predictions. Sure, investor confidence may have received a shot in the arm following successful Bank of England stress testing in November, reflecting the excellent progress of Lloyds’ Simplification cost-cutting programme.

But facing a prolonged period of earnings woe as the UK prepares for Brexit — a 4% bottom-line dip is predicted for 2017 alone — the bank may struggle to meet brokers’ heady dividend projections. And any hopes of a hike in interest rates are likely to prove short-lived as Threadneedle Street will in all probability need to keep monetary policy supportive, at least in the medium term.

Meanwhile, a probable build in PPI-related penalties ahead of a possible 2019 deadline — a timeframe still to be rubber-stamped by the FCA — could put fresh pressure on the balance sheet, and with it hopes of electric dividend growth at the bank.

I reckon both Lloyds and Shell could end up disappointing income chasers in the near-term or beyond.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.