The airlines have been hit particularly hard, with British Airways owner IAG down more than 16%, at time of writing. Ryanair is down 10% and easyJet down by 13%. Aircraft engine maker Rolls-Royce has fallen 5.5%, as fears grow over international travel.

FTSE 100 energy giants BP and Shell are also down around 5% or 6%, as any Covid resurgence could hit demand for oil.

Who’s afraid of a stock market crash?

Judging by the sectors hit today, it’s beginning to feel a lot like March 2020. As well as FTSE 100 travel and energy stocks, entertainment enterprises are in the mire. Cineworld, Mitchells & Butlers and Restaurant Group are firmly out of favour. Online grocery delivery specialist Ocado Group is bucking the trend by climbing.

As Hargreaves Lansdown markets analyst Susannah Streeter has noted, scientists are calling the mutations “horrific” and of “great concern”. Their dire warnings have triggered a sell off in Asia, where Japan’s Nikkei and Hong Kong’s Hang Seng both fell by 2.6%, while in Europe, the DAX, CAC 40, and Euro STOXX 100 are all tumbling.

I have cautiously backed both BP and Shell in recent days, but lacked the courage to buy airline stocks which look too exposed to pandemic uncertainties. That is one reason why I am relatively sanguine about today’s events (at least from an investment perspective). It’s not the most important one, though. As ever in the middle of a stock market crash, the idea of selling any of my shares or funds simply doesn’t occur to me.

I’ll buy FTSE shares once they get cheaper

I’m still more than a dozen years away from retirement, and that gives my portfolio plenty of time to recover from the current setback. With luck, today’s Covid fears will have been overdone. Even if they’re not, it’s impossible to assess the impact on stock markets. There are just too many variables, including how central bankers will respond.

If the stock market crash does lead to a more protracted slump, further stimulus could be forthcoming, bolstering shares. Investors have been quietly making that bet for years. The US Federal Reserve has effectively been backstopping share prices since the financial crisis.

My wider point is that nobody knows where stock markets will go next. They could crash further. If they do, I still won’t sell. Instead, I would take the opportunity to pick up my favourite FTSE stocks or funds at a reduced price.

History shows that stock markets always recover after a crash, if you give them long enough. In my opinion, they remain the best way to generate long-term dividend income and capital growth for my retirement. Today’s grim news won’t change that.

The post Stock market crash: I’m still buying FTSE shares despite ‘horrific’ new Covid warnings appeared first on The Motley Fool UK.

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• After a 103% gain, this penny stock’s forecast to rise a further 106%. But will it?
• Will the stock market finally crash next week?
• No pension at 40? Don’t panic! A SIPP could be the answer
• Potentially 58% undervalued, is this a penny stock bargain?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado Group. 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.

Shell has refuted these claims and abrdrn, another major investor, believes a split would damage the company. As a rule, I don’t invest in oil companies. But the possibility of a green-only subsidiary with the capital of an oil giant has me interested.

Key statistics

Royal Dutch Shell is an Anglo-Dutch petrochemical company. It holds the rights to oil and gas fields across the world and has integrated refinement and distribution arms. It has also been making investments in researching hydrogen based fuels.

Today, Shell has 5.7bn shares outstanding — the total number of shares available — and is trading for 1,679p.

Third Point has currently has a $750 stake in Shell, which is quite a small holding compared to other investors. Despite this, the fund’s leader, David Loeb, made headlines on 27 October by suggesting that the company should be split up.

Why split up?

Loeb has called for the breakup because he believes that too many competing interests among stakeholders are preventing the Shell from taking decisive action on climate change.

Loeb claims that Shell is trying to appease shareholders who want maximum profits (by maintaining petrochemical extraction) as well as those who want to go green. The result of this is an ‘incoherent, conflicting’ strategy that appeals to no one and achieves nothing. Shell’s much touted blue hydrogen initiative has shown few results and relies heavily on non-existent carbon capture technology. Despite an announced share buyback worth $2bn, Shell has cut its dividend from 47 cents to 16 cents and the share price hasn’t fully recovered from the 2020 crash (when it traded for 2,270p). 

Loeb argues that breaking Shell into multiple subsidiaries will allow for each division to focus on its core goals. It seems he’s not the only one losing confidence in Shell. Dutch pension fund ABP has announced plans to divest all of its holdings in Shell, worth $15bn, claiming there is ‘insufficient opportunity’ to achieve ‘necessary, significant acceleration of the energy transition’.

Could this push up the share price?

There is no guarantee that Shell will split up, but if it does then how that split is implemented would have a major effect on its share price.

Abrdrn argues that splitting Shell up would negatively affect the company’s highly integrated supply chain. A fall in revenue would hurt investor confidence and bring the share price down. 

But, a company with even a fraction of Shell’s resources, focused on green energy, would be in a position to race ahead of the competition. A split up represents the kind of bold and decisive action needed for companies to survive the green transition.

For now, a split up still seems unlikely, however, I will keep an eye on the situation. If Loeb and ABP are able to leverage enough pressure to successfully implement this split, I would be interested in adding the renewable subsidiary to my portfolio.

The post Will Shell split up to go green? How would it affect the share price? appeared first on The Motley Fool UK.

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• How much is needed in an ISA to target a £766.60 weekly passive income?
• After a 103% gain, this penny stock’s forecast to rise a further 106%. But will it?
• Will the stock market finally crash next week?
• No pension at 40? Don’t panic! A SIPP could be the answer
• Potentially 58% undervalued, is this a penny stock bargain?

James Reynolds 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.

Throw in the fact that management recently dropped the dividend for the first time since the Second World War, and Royal Dutch Shell doesn’t look like the sure-fire winner it used to be, and I think its share price will remain under sustained pressure.

For years, Royal Dutch Shell and rival BP were the undisputed FTSE 100 dividend kings. The world ran on oil, and these two were the cornerstone of every UK income portfolio. They still pay generous dividends, although less so in the case of Shell, which currently yields 3.6%, rather than the 5%-6% investors had come to expect.

FTSE 100 oil companies could struggle

Naturally, the pandemic hit the Royal Dutch Shell share price hard. By October last year it had plunged to 866p, a 20-year low. Oil has since recovered to almost $70 a barrel, comfortably past the company’s break-even point of around $50. That’s good news for Shell, but there is bad news elsewhere.

The fight against climate change is likely to inflict further damage on the Royal Dutch Shell share price, following last week’s move by a Hague court to order Shell to halve its carbon emissions by 2030. Shell plans to appeal, but as I argued yesterday, the writing is on the wall for big oil.

Shell has been battling to comply with Paris Agreement demands, but that is now a legal obligation rather than a broad aspiration. The ruling applies to its entire business chain, from suppliers to end consumers. It could also affect investor behaviour. Institutions are already under pressure to comply with ESG demands, and now have another reason to back away. The ruling will further empower activists, who sense blood.

Whatever people’s views on climate change, this should affect their views on the Royal Dutch Shell share price. The truth is that Shell and its rivals were always going to struggle to clean up their operations in the time available to them. Management has been targeting net zero emissions by 2050, and even that looks unrealistic, given that they peaked at a massive 1.7 gigatonnes a year in 2018.

The Royal Dutch Shell share price feels the heat

Technologies such as carbon capture and storage are notoriously expensive. Management has pledged to double its renewable electricity output by 2030, but this will require massive capital investment. Also, barriers to entry are lower for renewables than oil, so competition will be tough. As if that wasn’t enough, Shell has also set itself a target of reducing net debt from $71.3bn to $65bn, and increasing today’s dividend by 4% a year.

The Royal Dutch Shell share price is on a bumpy road. I fear too many investors are looking in the rearview mirror, rather than the road ahead.

The post Is the writing on the wall for the Royal Dutch Shell share price? appeared first on The Motley Fool UK.

More reading

• How much is needed in an ISA to target a £766.60 weekly passive income?
• After a 103% gain, this penny stock’s forecast to rise a further 106%. But will it?
• Will the stock market finally crash next week?
• No pension at 40? Don’t panic! A SIPP could be the answer
• Potentially 58% undervalued, is this a penny stock bargain?

Harvey Jones 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.

The FTSE 100 oil giant’s share price is down around 3% after Q4 adjusted profits disappointed, with the figure of $393m a hefty 87% lower than a year ago. Low oil and liquified natural gas (LNG) prices played a part, and Shell also reported lower production volumes and refining margins. This was partly offset by lower operating expenses and higher chemicals margins.

Royal Dutch Shell shares have had a tough year, as pandemic lockdowns and travel bans destroyed oil demand. They trade 35% lower than 12 months ago. Worryingly, this is part of a longer downward trend. The stock trades 41% lower than a decade ago.

Fallen FTSE 100 income hero

At least long-term investors have banked plenty of dividends along the way, as Shell has been one of the best income stocks on the FTSE 100.

Famously, it hadn’t cut its dividend since the war, but Covid-19 ended that proud record last April. Management cut its dividend by two thirds to 16 cents a share, in a move chief executive Ben van Beurden called “monumental”. In October, he lifted the Q3 payout to 16.65 cents, which was less than monumental.

Management now predicts the dividend will climb to 17.35 cents in the first quarter of this year, so at least it is heading in the right direction. Shell now offers a forecast yield of 4%, which is modest by recent standards, but hopefully more secure, as it is covered twice by earnings. That’s something in this era of low interest rates. As we would expect, Royal Dutch Shell shares are cheaper than they were, trading at a forward valuation of 12.4 times earnings.

Van Beurden has embarked on a “complete overhaul” of the business, as it looks to shift away from fossil fuels. As with BP, the idea was that oil and gas revenues would power the clean energy transformation, but the pandemic has rattled that theory.

I’d still buy Royal Dutch Shell shares today

Today’s reports show Q4 production down 14%, due to OPEC cuts, lower demand and hurricanes in the Gulf of Mexico.

At least management has started whittling down its $75bn debt pile, paying off $4bn by cutting costs and preserving cash. Disposals totalling billions of dollars will help.

When considering Royal Dutch Shell shares, I have to remind myself this is not the company it was. The new Shell has yet to be born, and the process will be costly, risky and expensive. Smaller, fast-moving rivals may have an advantage.

The good news is that oil inventories are falling and crude is climbing towards $60. The company still generated $6.3bn of cash flow this quarter. Royal Dutch Shell shares are riskier than they were, but I’m betting they will climb higher as the recovery comes.

The post Royal Dutch Shell shares are falling today. Here’s what I’d do next appeared first on The Motley Fool UK.

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• How much is needed in an ISA to target a £766.60 weekly passive income?
• After a 103% gain, this penny stock’s forecast to rise a further 106%. But will it?
• Will the stock market finally crash next week?
• No pension at 40? Don’t panic! A SIPP could be the answer
• Potentially 58% undervalued, is this a penny stock bargain?

Harvey Jones 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.

In November 2020, the UK government announced its plans to phase out the sale of new petrol and diesel cars by 2030. The acceleration of de-carbonisation plans came with £1.8bn of funding for infrastructure projects and grants.

Leading EV stocks

Many global car manufacturers have started plans to shift production from petrol and diesel vehicles to fully electric models. Some companies, including Tesla and Nio, are dedicated EV manufacturers. The future is uncertain and the EV market leaders in the next decade could change. However, these two could have a first-mover advantage, in my opinion.

A company that I monitor regularly and that is one of my largest holdings is Scottish Mortgage Investment Trust (LSE: SMT). This UK-listed fund managed by James Anderson and Tom Slater at Baillie Gifford holds both of these two EV stocks as its top five holdings.

Despite its name, this investment trust has nothing to do with mortgages. It’s focused on long-term investments in some exciting new businesses that have deep competitive advantages. The managers believe that rapid progress in several industries is creating large opportunities.

The trust increased by 110% last year and grew by over 400% over five years. I would like to see its strong performance continue and will continue to hold it for the long term. But I’m aware that short-term performance can fluctuate.

Powering electric vehicles

Electric vehicle manufacturers aren’t the only EV stocks that I could look at.

One company that I’m looking at might come as a surprise to some. It’s FTSE 100-listed energy giant, Royal Dutch Shell (LSE: RDSB). Traditionally focused on crude oil and natural gas, it’s not typically regarding as an EV stock at all. However, it was one of the pioneers for green forecourts in the UK that offer electric charging and hydrogen cell refueling.

This week it said that it was buying the UK’s largest on-street electric vehicle charging network, Ubitricity. Ubitricity’s car-charging network includes more than 2,700 charging points in the UK, which is 13% of the existing total market share. I reckon on-street car charging will be important for locations where home charging is particularly difficult. Ubitricity’s solutions that fit car chargers to existing lampposts or bollards could be a convenient and cost-effective way for local authorities to expand on-street charging.

In my opinion, Royal Dutch Shell could be one of the most interesting UK-listed EV stocks I’m looking at. It has a price-to-earnings (P/E ratio) of 11.9 and offers a dividend yield of 3.9%. There are no certainties. But it could benefit from a possible economic recovery this year and growing demand for electric vehicle charging.

The post EV stocks: 2 UK companies I’m looking at appeared first on The Motley Fool UK.

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Harshil Patel owns shares of Scottish Mortgage Investment Trust and Tesla. The Motley Fool UK owns shares of and has recommended Tesla. 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.

BP and Shell have been poor investments for years. Their troubles began before the pandemic. But Covid-19 has made life a lot, lot harder. Their share prices have crashed by more than half in the past 12 months.

BP’s market-cap has now fallen below £50bn. Shell’s stands at £80bn. That’s still pretty big, but Unilever (£125bn), AstraZeneca (£115bn) and mining giant BHP Group (£86bn) are now all bigger.

Oil and gas producers have performed worse than any other FTSE 350 sector over the last 10 years, according to AJ Bell.

Oil price may rebound

In June 2015, a barrel of Brent crude traded at a pricey $115. The oil price dipped below $30 the following January, but normal service appeared to be resumed as it headed above $80 over the next two or three years.

We now have no idea what normal service looks like as the world tries to wean itself off fossil fuels, which could leave both BP and Shell sitting on a massive pool of stranded assets.

They’re desperately trying to reinvent themselves as a result. New BP boss Bernard Looney started his tenure in February by calling for a rapid carbon transition to net zero. Last month, he said oil and gas production would drop by 40%, or 1m barrels of oil equivalent per day, over the next 10 years. Hydrocarbon revenues will be an “engine of value creation” that would help fund the shift into low carbon investments. 

Shell aims to cut its net carbon footprint by 65% by 2050, by switching to renewables, biofuels and hydrogen. The irony is that falling oil revenues will deprive both companies of the revenues they need to fund the switch.

Fallen FTSE 100 heroes

AJ Bell investment director Russ Mould says consensus forecasts assume BP and Shell will generate 7% of total FTSE 100 profits and 11% of dividend payouts next year. That’s a far cry from 2005, when they generated an astonishing one-third of profits.

That figure alone suggests you should reset your sights on what these two companies can do for you. They aren’t the forces they were.

When the lockdown finally ends, energy prices should rebound but even then there seems to be a limit on how high they can go, thanks to Permian shale. Although there’s a chance supply could shrink as companies shift out of oil, pushing up the price.

Despite the oil price crash, I wouldn’t write off BP and Shell yet. Now could be the time to get greedy when others are fearful.

Not too greedy though. The world is changing…

The post Oil price crash! Is now the time to dump BP and Shell for good? appeared first on The Motley Fool UK.

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Harvey Jones 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.

Fast forward to today, and Shell’s share price is actually lower than it was when I covered the stock in March. Did I get it wrong? Let’s take another look at the investment case for Shell.

Shell shares: can they recover?

Since my last article, the outlook for Shell has improved to a degree. Many countries are slowly coming out of lockdown and, as a result, demand for oil is picking up. China, for example, imported approximately 13m barrels per day (mb/d) in June, a record high.

As you can see in the chart below, the price of Brent crude oil has rebounded significantly since April.

Source: Trading Economics 

This rebound in the oil price is good news for Shell, as higher prices translate to higher cash flows and profits for oil companies.

Shell share price: an uncertain future

However, in terms of a recovery in Shell’s share price, there are a few other issues to consider. The first is Shell’s dividend. In the past, Shell was seen as a very dependable income stock that both private and institutional investors relied on for consistent dividends.

The situation is now very different. In its first-quarter results, Shell did the unthinkable and cut its dividend (for the first time since World War II). It was a significant cut too, with the payout reduced by 66%.

That kind of cut is likely to impact sentiment. No longer is Shell a rock-solid income stock.

Additionally, that cut says something about the challenges Shell’s facing. Analysts at Credit Suisse recently said the dividend cut is reflective of times to come, with “a harsh operating environment in the near term and slower recovery over the medium term.”

Another issue that could hold Shell’s share price back is uncertainty in relation to future oil demand. In the short term, people are less likely to travel internationally due to Covid-19. Meanwhile, the work-from-home trend means people may travel less on a permanent basis. This potentially translates to lower demand for oil. This could hurt Shell’s share price going forward.

Finally, it’s also worth thinking about today’s focus on sustainable investing. Increasingly, institutional investors are investing on a sustainable basis as that’s what their clients are looking for. Shell cannot be considered a sustainable stock. This means it may not generate the same kind of investor interest that it has in the past.

Are RDSB shares worth buying?

Shell’s share price could still rebound. However, a sustained recovery is far from guaranteed, given the many challenges the FTSE 100 company faces today.

I own Shell shares and will hold on to them, for now. However, I think there are much better stocks than Shell to buy today.

Instead of investing in an industry that’s set to experience challenges in the near term, I’d be looking at buying high-quality stocks in industries that are set for growth in the years ahead.

The post Shell’s share price is down 46% in 2020. Is now the time to buy? appeared first on The Motley Fool UK.

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• Potentially 58% undervalued, is this a penny stock bargain?

Edward Sheldon owns shares in Royal Dutch Shell. 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.

The Ocado Group (LSE: OCDO) share price success is no flash in the pan. It’s one of the most successful on the FTSE 100, rising an incredible 580% in just three years. So why would I choose to buy the Royal Dutch Shell (LSE: RDSB) share price instead?

My big fear is that Ocado’s shares have risen too fast, too quickly. The online grocer has a lot of hard work ahead of it, to justify today’s valuation. It may get there, but recent share price growth could go into reverse if it has any setbacks.

FTSE 100 stock market crash hero

The lockdown delivery surge that saw customers battling for precious Ocado slots is over, unless we get a second wave of the pandemic. Competition in this area may rise too. Witness the tie-up between Aldi UK and Deliveroo. 

Group sales doubled in the second quarter, but that can’t continue. On the other hand, Ocado will have picked up new customers, many of them elderly who will continue to see the benefits of shopping online.

To justify today’s sky-high Ocado share price, management has to deliver on hopes of becoming a global technology company, helping grocers around the world robotise their warehouses. It’s an exciting target, but expensive to achieve. Ocado has posted a loss for five years in a row.

The good news is that revenues are growing at a much faster rate than others in the supermarket sector. The Ocado share price could climb higher still, but I think the pace has to slow and it’s also vulnerable to bad news.

By contrast, Royal Dutch Shell has had a rotten year. The twin stock market and oil price collapse hit it hard. Its legendary dividend, never been cut since the Second World War, has finally fallen. At least for now.

Better value than the Ocado share price?

The Shell share price is still down a third this year, despite its recent recovery. It trades at just over nine times earnings. That looks a tempting valuation, especially with oil now climbing, and Brent crude trading above $42 a barrel.

As the world emerges out of lockdown, demand may increase. At the same time, OPEC+ production cuts may hold. The oil price may climb higher. If it does, pressure will grow to bring the dividend back.

When it does return, the Shell share price could enjoy another jump upwards. It’s up 16% over the last month and I think it has more scope for growth than the Ocado share price.

Naturally, Shell faces plenty of challenges too. Notably the long-term shift away from fossil fuels, and into renewables. However, many of the risks are in today’s price. Now may prove a good time to buy this FTSE 100 dividend hero, before it recovers further.

The post Forget the Ocado share price! I’d rather buy Royal Dutch Shell appeared first on The Motley Fool UK.

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Harvey Jones 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.

I’ve picked out these two FTSE 100 stalwarts because they’ve endured two meltdowns. The coronavirus crash, and the oil price collapse. In both cases, the worst is over, for now. Despite this, both are way cheaper than at the start of the year.

The BP share price has crashed

This makes now an appealing entry point for those looking to build a portfolio of FTSE 100 shares large enough to help them retire early.

The BP share price started 2020 trading at around 480p. Today, you can buy it for 306p. That’s a thumping 35% drop. It’s the same story with the Royal Dutch Shell share price. It started the year trading at 2,258p. Today, it stands at 1,242p. That’s an even bigger drop, of 45%.

Just because a FTSE 100 company’s share price has crashed, doesn’t automatically make it a bargain. At one point, crude producers were paying people to take their shipments. That was due to the crash in demand as economies went into lockdown, and the surge in supply as Russia and Saudi Arabia turned on the spigots to destroy US shale.

Today, Brent trades at $35 a barrel. Coincidentally, that’s BP’s targeted break-even price for 2021, down from $56 in 2019, according to chief executive Bernard Looney.

Analysts at Redburn recently put Shell’s breakeven point at a more demanding $65. I’m therefore not surprised the group was first to blink, by cutting its dividend for the first time since the war.

The Royal Dutch Shell share price is cheaper

For me, BP has the edge on two fronts. Right now, the FTSE 100 giant yields a barnstorming 10.57%. That’s an astonishing income, especially when you consider all the dividend cuts elsewhere. You can take that tax free inside a Stocks and Shares ISA.

BP stood by its dividend despite a 67% drop in first-quarter profits. Dividends are never guaranteed, but even if management halved the payout, the stock would still yield 5%. 

Shell looks cheaper, trading at 7.91 times earnings, against BP at 19.5 times. You have to take traditional FTSE 100 valuation metrics with a pinch of salt these days, but it’s a pointer.

FTSE 100 shares will build your wealth

The big question to consider with both FTSE 100 oil majors is where oil goes next. Renewables will continue to get cheaper, squeezing oil. Both companies will want to expand in this area, while looking to drive down carbon emissions from other activities. This will cost.

If you want to buy these two FTSE 100 oil stocks to fund your retirement, I would recommend doing it while they look relatively cheap. Like today.

The post Stock market crash: I’d buy these 2 FTSE 100 recovery stocks to get rich and retire early appeared first on The Motley Fool UK.

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• A stock market crash this summer? Here’s how it could help
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Harvey Jones 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.

The Royal Dutch Shell (LSE: RDSB) share price is trading 47% lower since Covid-19 struck. Yet the oil major is standing by its legendary dividend, which means it now yields an incredible 10.82% a year. That makes it a highly tempting bargain FTSE 100 stock.

Inevitably, there are risks. The oil industry has suffered a double blow. The coronavirus travel ban and lockdown has hit fuel consumption, while the decision by competitors Russia and Saudi Arabia to flood the market has done the rest.

I’d buy this bargain FTSE 100 share

At time of writing, a barrel of Brent crude trades at just over $21. At one point, producers were paying for people to take WTI crude off their hands. There is so much of the stuff washing around, they do not know where to store it.

This is bad news for Royal Dutch Shell, as its break-even price is $65 a barrel, according to Redburn. Yet the company will be unwilling to drop its dividend, like so many others have on the FTSE 100. Management is well aware of its proud record of never cutting its payout since the war. It showed tenacity in maintaining the payout in 2016, when oil crashed from around $115 a barrel, to a low of $26. Shell was a bargain FTSE 100 stock then, it’s a bargain now.

Shareholder payouts appear to be safe this year. Management is surely hunkering down in the hope of sitting out the current meltdown, and waiting for higher oil prices later this year or in 2021.

Royal Dutch Shell share price is cheap

The oil price has picked up in recent days, despite another big rise in US crude stockpiles. The first sign of an upward movement triggered a sharp 45% jump in the Shell share price, from its low of 916p on 18 March. Now that was a great time to buy this stock. This is why we at the Fool always urge long-term investors to go hunting for bargain FTSE 100 stocks when markets fall and everybody is panicking. The resurgence can be just as swift.

Anybody who buys Shell shares today must accept that the price could fall further, and the dividend could come under further pressure. If that wasn’t the case, its stock would be a lot more expensive to buy and nowhere near as tempting. Shell is still a great UK company and its shares are going cheap. I’d buy it.

The post This bargain FTSE 100 stock yields 10%. I’d buy it today appeared first on The Motley Fool UK.

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• After a 103% gain, this penny stock’s forecast to rise a further 106%. But will it?
• Will the stock market finally crash next week?
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Harvey Jones 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.