Then I bought BP (LSE: BP) instead. This isn’t a slight on Shell. It was, in my view, the better-run operation. So why did I plump for the problem child?

First, its shares were cheaper. The yield was higher (above 6% at the time). My investment term was years, decades, ideally for life. Which gave BP plenty of time to sort itself out and roar back to life, rewarding me for my patience. Unfortunately, BP is now in the headlines for all the wrong reasons. Again.

What’s wrong with BP?

On Wednesday (27 May), BP ousted chairman Albert Manifold with immediate effect due to “serious concerns” relating to “important governance standards, oversight and conduct”. All of which Manifold disputes. I suspect this is going to get messy.

Things have been messy at BP since the Deepwater Horizon disaster in 2010. The ‘Beyond Petroleum’ pivot into renewables flopped. In 2022, it banked a mighty $25.5bn loss on its stake in Russian-owned Rosneft, due to the Ukraine war.

The boardroom looks chaotic, with CEOs Bernard Looney and successor Murray Auchincloss moved on in short order. Including interim appointments, BP has had five CEOs and three chairmen since 2020. The latest issues suggest this might be systemic, rather than bad luck.

So do I regret my decision to buy BP? Not a bit of it. Because since I bought the stock, BP has outpaced Shell.

The BP share price is up around 43% over the last year, compared to 28% for Shell. Dividends have been higher too. I should point out that over five years, Shell smashes BP, up 130% against 72%. So a lot of the recent action was playing catch-up. But my timing has worked so far. Or maybe I just got lucky.

Ultimately, boardroom dramas matter less than the oil price. As the Iran war threatens supply shortages and triggers market volatility, BP’s making money, notably through its trading arm. So is Shell, of course. But the outlook could rapidly reverse, if we get peace in the Middle East.

Could both stocks fall at once?

Despite their strong recent performance, both look reasonable value. BP trades on a forward price-to-earnings ratio of about 7.6. Shell’s only slightly pricier at around 7.98. That’s closer than before. Dividend income is a key attraction for me, and here BP wins. It has a forecast yield of 4.94% this year, rising to 5.16% in 2027. Shell’s forward yield’s 3.7%, edging up to 3.83% in 2027.

I’m happy with BP, even if Shell’s the better-run business. But it’s in desperate need of a strategic shake-up. Also, if the Iran war is concluded and oil prices fall, both shares could soon be heading south.

I plan to hold BP through thick and thin, but I wouldn’t consider buying either stock right now. This remains a cyclical sector, and I’d rather buy when they’re out of favour than riding high. I may get another opportunity in the volatile weeks ahead.

Should you invest £5,000 in Shell Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Shell Plc made the list?

Harvey Jones owns shares in BP.

The post Are BP’s boardroom struggles a good argument for buying Shell shares instead? appeared first on The Twelfth Magpie.

The stock market sees it as an oil company. But its main product is natural gas – and that’s where the investment thesis begins…

Natural gas

Over half of what Shell produces is natural gas. And the supply and demand economics for its products look pretty good right now. 

The stock market has been fascinated by data centres recently. But one of the things it’s noticed is that they’re very energy-intensive. Renewables and nuclear don’t look like viable power sources right now. So that leaves natural gas as the remaining option.

That’s the demand side of the equation. In terms of supply, there’s a lot of production, but it’s not quite as straightforward as that.

Natural gas gets produced as a by-product of drilling for oil. But in most places, the infrastructure to process it just isn’t there.

By contrast, Shell owns pipelines, liquefaction plants, and floating structures for processing natural gas. And that’s a huge advantage.

Is the stock underrated?

Despite its strengths, the stock market seems wary of Shell. Compared to its US counterparts, the stock trades at a low price-to-book (P/B) multiple:

Why the discount? The most obvious reason is that the UK government has a less positive view of hydrocarbons than the US.

This, however, is a pretty bad reason. While the UK is imposing windfall taxes on oil and gas firms, less than 5% of Shell’s production is UK-based.

The majority of the firm’s production assets are based in places like Australia and Asia. That means it’s well out of the way of UK windfall taxes.

The stock might be part of the FTSE 100, but the firm is a global business. So investors might be overestimating the tax situation.

What could go wrong?

Shell could be in a really nice position to benefit from a supply and demand imbalance. With investments, however, there are always risks.

Building out the infrastructure to support natural gas transport is expensive. But it is happening, with both the US and Qatar investing heavily.

There are also risks on the demand side. One is the possibility of fewer data centres being built. Governments are increasingly wary of the impact on domestic energy bills. So growth on this front might not be unlimited.

Another is the possibility that power demand drops as AI shifts from training to inference. This means more efficient chips.

These are all possibilities. But until they become more realistic, I think they’re ones to keep an eye on, rather than worry about.

Should I buy Shell?

Shell has done a lot right in recent years. Its focus on natural gas over renewables has proved to be a good one – so far, at least. 

The stock also trades at a discount to the US oil majors for reasons I find hard to discern. And that’s something to take seriously.

Could Shell be the UK’s most underrated stock right now? I’m not sure – but I certainly think it’s worth a look for investors.

Should you invest £5,000 in Shell Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Shell Plc made the list?

Stephen Wright has no position in any of the companies mentioned.

The post 1 of the UK’s most underrated stocks? appeared first on The Twelfth Magpie.

The engine cogs

The big point to note is how Shell actually makes money. There are three main ways it generates revenue. First, there’s upstream, where Shell produces oil and natural gas. This is the most directly exposed to commodity prices. When the oil price rises, Shell’s realised prices rise almost one-for-one. However, costs don’t move nearly as fast, so the profit margin expands sharply.

Second is integrated gas (which includes LNG), arguably the crown jewel. Shell is one of the world’s largest LNG traders. This element is only partly connected to oil prices.

Third (and final) is downstream, which includes elements like refining. This segment is less about price and more volume-driven instead. For example, it benefits when refining margins are strong.

Understanding these revenue areas helps show that, even though Shell is still meaningfully exposed to oil prices via upstream, it’s less exposed than in previous economic cycles. In fact, I read that the downstream part of the company can even do better with lower oil prices, as it sometimes improves refining margins and boosts demand.

A realistic view

Should we get a resolution in the Middle East, a fall in the oil price will negatively impact Shell’s profits. However, based on the current company setup, I don’t see it as being a huge risk. Further, it’s less about oil falling and more about the extent of any move. Shell was still generating billions in profit in Q4 2025 and free cash flow of $26bn for the full year, even with oil prices substantially lower than they are now. Therefore, it can clearly survive (and remain profitable) even if oil prices fall back to these levels.

Of course, I’m not pretending that a good chunk of this year’s share price rally isn’t due to higher oil prices. The stock is now up 33% over the past year. But with a price-to-earnings ratio of 13.87, it’s below the FTSE 100 average of 16.2. Therefore, any potential hit from a fall in oil could be cushioned because it’s already viewed as undervalued.

Looking ahead, I do think that an eventual resolution to the conflict is coming, which should lower the price of oil. However, I don’t think Shell is as exposed as some suggest. Therefore, if we do see a move lower in the stock at that point, I have it on my watchlist as a stock to consider buying.

Should you invest £5,000 in Shell Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Shell Plc made the list?

Jon Smith has no positions in the shares mentioned

The post How exposed is the Shell share price to a move lower in oil? appeared first on The Twelfth Magpie.

Much of the fall looks like simple profit-taking after a strong 12‑month run, in my view. And further weakness may have come from hopes of a settlement to the US/Israel‑Iran conflict.

However, oil and gas prices move in cycles — sometimes sharply — and Shell is built to weather these swings.

So, how much value does the stock look to have in it?

The numbers the market’s overlooking

The scale of the undervaluation starts to show in an examination of Shell’s Q1 performance.

Adjusted earnings surged 112% quarter on quarter to $6.9bn (£5.1bn), reflecting a powerful rebound across the portfolio. This was further underlined by a 110% jump in cash flow from operations (ex‑working capital) to $17.2bn.

Upstream earnings rose 50% to $2.4bn, driven by higher realised liquids prices, while Marketing earnings more than doubled to $0.5bn. The standout was Chemicals & Products, where adjusted earnings climbed from -$0.1bn to $1.9bn, supported by higher refinery utilisation and improved refining margins.

These trends illustrate how Shell’s integrated model, disciplined capital allocation and exceptional trading arm continue to drive earnings momentum.

Its confidence in the underlying growth momentum was echoed in the announcement of a $3bn share buyback over the next three months. These tend to support share price gains.  

A risk here is any supply chain issues connected to its energy transition businesses, which could squeeze margins. Another is any tax rises in its key jurisdictions that would eat into its free cash flow.

Nevertheless, analysts forecast Shell’s earnings will rise by an average of 5.8% a year over the medium term at least.

So where ‘should’ the shares be trading?

Price and value often diverge in the stock market. The price of a share is simply the outcome of short-term trading, but its value is rooted in the fundamentals of the business behind it.

For savvy and patient investors, that gap is crucial. History shows that prices usually gravitate towards fair value over time, making the difference between the two an important driver of long-term gains.

To estimate where a stock should trade, discounted cash flow (DCF) analysis projects future cash flows and discounts them back to today. When those projections become less certain, investors demand higher returns, which increases the discount applied.

DCF models differ, according to the assumptions used by the analysts involved. But based on my own framework — including a 7.4% discount rate — Shell shares look 55% undervalued at £31.86.

That implies a fair value of £70.80 — more than double the current price. Consequently, if markets continue drifting toward fair value, this could be a great buying opportunity to think about if those DCF assumptions prove correct.

My investment view

Given the stock’s steep discount to fair value, the market seems to be underestimating the strength and resilience of Shell’s cash‑generating engine.

The combination of rising earnings, disciplined capital returns and a robust balance sheet gives investors a compelling margin of safety at today’s price.

For me, that makes the recent weakness look like an unmissable opportunity to increase my holding in the stock.

Simon Watkins has positions in Shell Plc. The Twelfth Magpie 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 and Hidden Winners. Here at The Twelfth Magpie we believe that considering a diverse range of insights makes us better investors.

The post Down 11% from its one-year high, is Shell’s share price a steal after stunning Q1 results? appeared first on The Twelfth Magpie.

The disconnect is even more striking, given the energy giant’s huge free‑cash‑flow generation, disciplined capital spending and ongoing share buybacks that steadily lift per‑share value.

So, what sort of gains could investors be looking at here?

How wide is the valuation gap?

The massive gap between Shell’s price and its fair value is not unusual in the stock market. The two measures often diverge, as they are driven by very different factors.

The price of a share is simply the outcome of short-term trading — the level at which market participants are willing to deal. But its value is rooted in the fundamentals of the business behind it.

For savvy, long-term investors, that gap is crucial. History shows that prices usually gravitate towards fair value over time, making the difference between the two an important driver of long-term gains.

Professional investors often rely on discounted cash flow (DCF) analysis to cut through the market noise and estimate what a stock is genuinely worth. The method projects future cash flows and discounts them back to today. The less certain those projections, the higher the discount applied to them.

Because analysts use different assumptions, their DCF valuations naturally diverge. Using my own inputs, including a 7.2% discount rate, Shell looks 63% undervalued at its current £33.14 price.

That places fair value around £89.57 — more than twice the current level.

Consequently, if markets continue drifting toward fair value, this could be an exceptional opportunity if those DCF assumptions prove correct.

How does growth momentum look?

The key catalyst to move price to fair value over time is sustained earnings growth. A risk for Shell is any sharp downturn in oil and liquefied natural gas (LNG) prices. It could quickly feed through to lower cash generation and slower earnings momentum. Another would be any substantial rise in capital‑investment demands for its energy transition businesses. This might squeeze free cash flow and delay the pace of per‑share value growth.

Nonetheless, analysts forecast Shell’s earnings will increase by an average of 6.4% a year to end‑2028, at a minimum. Its latest (Q4 2025) results showed adjusted earnings of $3.3bn (£2.4bn), supported by strong operational performance in Upstream and Integrated Gas in a lower‑price environment.

Cash flow from operations came in at a strong $9.4bn, reflecting resilient cash generation across the portfolio. Full‑year free cash flow of $26.1bn continued to fund dividends and buybacks while maintaining a robust balance sheet. This highlighted the benefits of Shell’s $5.1bn structural cost‑reduction programme and disciplined capital allocation.

Together, I think these elements should continue to support solid earnings growth ahead.

My investment view

Shell stands out as a stock that combines deep undervaluation with clear, ongoing drivers of long‑term value creation. These are strong cash generation, disciplined capital spending and meaningful cost efficiencies, which give investors a solid foundation for potential gains.

For long‑term investors willing to look past short‑term volatility, Shell’s current valuation makes it a worthy candidate for serious consideration.

And I will certainly be adding to my existing holding at the earliest opportunity.

The post Down 8%, is Shell’s share price a steal now around £33? appeared first on The Twelfth Magpie.

The move ends nearly 60 years of membership, and was described by one analyst as “the beginning of the end of Opec“. The UAE is the third-largest producer in the group of 12 countries and will exit the group on 1 May.

So what does it mean for British energy shares — and should investors be concerned?

Volatility, as usual

The UAE’s exit may be bad news for Opec, but it’s not an immediate disaster for British energy investors. For FTSE energy shares such as BP (LSE: BP) and Shell (LSE: SHEL), the key issue is still the oil price.

A weaker Opec will probably lead to supply problems, which ultimately means volatility and higher crude oil prices. That’s not an ideal situation (as everything gets more expensive), but it can mean more cash flows for oil producers while prices stay high.

Essentionally, for energy stock investors, the gains could offset higher expenses elsewhere.

Should UK investors do anything?

BP and Shell tend to benefit when crude prices rise, with Reuters recently highlighting that BP’s results are particularly sensitive to oil-price volatility. Shell’s profits similarly move with weaker or stronger oil and gas prices but to a lesser extent.

That means the UAE’s departure could be mildly positive for earnings if it helps keep oil elevated. But it could also raise the risk of sharper price swings that make forecasts less reliable.

For UK investors, this is more a market structure story than a direct company-specific shock. BP and Shell are both diversified global businesses, with shares are driven by a number of factors aside from Opec membership, including:

• Oil prices.
• Gas prices.
• Trading performance.
• Share buybacks.
• Capital returns.

In the greater scheme of things, this isn’t a huge development. UK energy shares have already suffered volatility from this year, rising when crude jumps and weakening when higher oil prices drive inflation worries.

So what’s the likely impact?

In the near term, the UAE leaving Opec could be:

• Positive for BP and Shell if traders price in tighter supply and higher crude prices.
• Negative for consumer-facing parts of the FTSE if higher energy costs feed inflation and pressure sentiment.
• Neutral overall if the market decides the move simply adds volatility without changing actual supply that much.

In reality, the foundational picture remains the same, with the key risk being disruption at the Strait of Hormuz. To that end, performance will depend on how each individual company meets the challenge.

BP has already boasted about exceptional trading conditions, while Shell has kept buybacks and is still shaping its portfolio through deals.

The key takeaway?

Overall, I don’t see any reasons for investors to be too concerned. The UAE’s exit probably makes the oil market more unpredictable, and that can cut both ways for UK energy shares.

It may lift earnings while prices are strong, but it also increases volatility risk and valuation noise. So for long-term investors, I’d say it’s sensible to focus on balance sheet strength, dividend cover, buybacks and oil-price sensitivity.

The Opec story might make for sensational headlines but it’s certainly no reason to panic.

The post How should FTSE 100 energy investors react to the UAE quitting Opec? appeared first on The Twelfth Magpie.

As a rule, a rising oil price is good for energy stocks. At the start of the crisis, Brent crude traded at just over $60. Today, it’s at $114. If the war drags on, analysts say it could top $120. So how have BP and Shell shares responded?

Since the war began on 28 February, the BP share price is up around 20%. Shell is more sluggish, up a modest 7%. Given that we’re supposedly facing the biggest energy supply shock in history, I expected better. Here’s what I think is going on.

Why aren’t these FTSE 100 stocks doing even better?

First, the higher oil price hasn’t shown up in profits yet. BP reported yesterday, but its Q1 results ran to 31 March, so they only caught the early stage of the spike. Second, investors have broadly accepted Donald Trump’s assurances that the war is under control. Nobody wants to go big on BP and Shell, only for the Strait of Hormuz to reopen next day. Their shares will plunge as a result.

There’s a longer-term worry. The oil shock might ultimately rebound on Big Oil. It could trigger more windfall taxes, and persuade import-dependent countries to accelerate their switch to renewables. Nobody is taking anything for granted. Yet one thing is clear. BP and Shell have been terrific investments lately.

Over the last 12 months, their shares are up 60% and 34%, respectively. If an investor had split a £20,000 Stocks and Shares ISA equally between them one year ago, their BP stake would be worth £16,000 and Shell £13,400. But that’s not all they’d have.

BP has a trailing yield of 4.25%, with Shell’s at 3.25%. That lifts their total returns to roughly £16,425 and £13,725, respectively. In total, the two energy giants have turned a £20,000 ISA investment into £30,150, in just one year. That shows the supreme wealth-building power of shares. But can it continue?

They’re risky, but are they rewarding?

Given today’s high oil price, there’s a good chance of more rewards. Yesterday (28 April), BP said underlying replacement cost profit more than doubled from $1.5bn to $3.2bn in Q1, boosted by its busy trading division. Yet there are still challenges. Net debt rose by $3.1bn to $25.3bn, the board said, “primarily driven by lower operating cash flow”. Shell’s debt is higher still, climbing $6.9bn in 2025 to $45.7bn. However, it’s the bigger company, with a market cap of £184bn versus £83bn.

BP has been the messier story, lurching into renewables then back out again, with boardroom issues along the way. Its shares trailed Shell for years but are now playing catch-up, which helps explain recent superior gains.

As ever, there are risks. The Iran conflict is unguessable. A global recession could hit oil demand. The UAE is pulling out of OPEC, which could boost supply and squeeze prices in the longer term. And there’s climate change. BP and Shell remain high-risk, high-reward stock opportunities. I think both are well worth a closer look, for investors who have a taste for excitement – and dividend income.

The post A £20,000 ISA invested in red-hot BP and Shell shares 1 year ago is now worth… appeared first on The Twelfth Magpie.

So, might they still be attractively priced for a long-term investor like myself? Or could it make more sense to do nothing for now?

Strong business, helped by the oil price

The reason for that rise is not hard to discern.

With oil prices having soared lately, companies that extract and sell the black gold are in clover.

Indeed, while Shell’s 36% jump in the past year is impressive, rival BP has performed even better. Its share price is now 60% higher than it was 12 months ago.

It is possible to look at those sorts of price movements and put them to down to current high oil prices. If they come back down to earth – as they will sooner or later, based on historical norms – then both Shell and BP shares could fall.

But it is also possible to overstate the short-term factors here. Shell is a massive company with large reserves. Even if oil prices fall, it could potentially still generate chunky profits.

Even after its share price climb over the past year, the Shell dividend yield of 3.3% is slightly higher than the FTSE 100 average.

My concern about buying high

Still, while there is a lot to like about the Shell business, the current valuation does not strike me as particularly attractive.

Shell shares sell on a price-to-earnings ratio of 15. The prospective valuation could be cheaper, in fairness, as rising oil prices may help boost Shell earnings in coming quarters – perhaps substantially.

However, my approach to investing in cyclical industries like oil or mining is that it is best to try and buy at or near the bottom of the pricing cycle, when selling prices are depressed and share prices tend to be cheap too.

It is never possible to know with certainty when we are at the bottom of the pricing cycle. But I do know for sure that with oil prices where they are now, we are nowhere near it.

I could still buy Shell shares today, likely picking up some dividends along the way, and hang on while hopefully they go up in value.

But as a long-term investor, I am not simply seeking to make a fast buck. I want to buy at what I see is an attractive price and then hold for years, without worrying about short-term movements in the oil price.

On top of that, the last time I owned Shell shares I got a nasty surprise when – in 2020 – it cut its dividend for the first time since the Second World War. That is a risk with any share, but it did underline for me just how damaging an oil price crash can be for the company’s finances.

So, while oil prices remain elevated, I have no plans to buy Shell shares again. Fortunately, there are other shares in the London market that look like much better value to me right now.

The post Up 36%, could Shell shares still offer value for the long term? appeared first on The Twelfth Magpie.

Investors in rival BP (LSE: BP) have even more to shout about. The oil giant has had a wretched time since the Deepwater Horizon catastrophe in 2010. That was followed by a messy U-turn on renewables, constant pressure from activist investors, and the relatively quickfire exit of two CEOs.

When I decided to add an oil stock to my SIPP 18 months ago, I chose BP because of its problems, not despite them. The shares were cheap, the yield topped 6%, and I saw recovery potential if it got its act together. I’m still not convinced the BP strategy is fully there, but the shares are up a mighty 63% over the last year and 33% over the last three, otherwise volatile, months. The dividend yield has slipped, but still pays a solid 4.26%.

Top FTSE 100 growth stocks today

Where both stocks go in the short run largely depends on events in Iran. Lately, investors have chosen to be more optimistic. Brent crude has eased back to $95 a barrel, and BP and Shell have retreated too. But if the Strait of Hormuz supply route remains under threat, shortages could bite quickly and oil and their stock prices could surge again. Over the next few weeks, anything could happen. But in the long term, this conflict could prove to be bad news for BP and Shell.

It’s reminded everyone just how essential oil and gas remain to the global economy. But it’s also revealed how exposed importing nations are to supply shocks. Until now, there was at least an assumption that key shipping lanes would stay open. That no longer feels certain. Hormuz has always been a potential chokepoint, but now it’s being throttled. All it takes is one cheap drone to stop a massive tanker.

The oil giants could slide

As a result, countries could accelerate plans to cut their reliance on imported oil and gas. China is ahead of the game, and major fossil fuel importers such as South Korea, India, South Africa, Turkey and Italy have fresh incentives to follow. Across Africa, micro-solar is expanding rapidly. Nobody wants to be at the mercy of geopolitical shocks.

If Iran tensions ease quickly, that urgency may fade, but a hard lesson has been learned. The world will still need oil and gas for years, not just for energy but for plastics, fertiliser and pharmaceuticals. Yet this could prove a turning point.

I think both BP and Shell are both worth considering today, as part of a balanced portfolio. But a vague long-term risk has suddenly come into sharper focus. There may be better long-term opportunities out there today.

The post Does the Iran war spell long-term disaster for BP and Shell shares? appeared first on The Twelfth Magpie.

Anyone spending £5,000 on the energy giant’s shares today would only be able to afford 149 of them. Does this mean it no longer makes sense to consider buying Shell’s stock? Let’s explore this further.

An unfortunate reality

It’s an uncomfortable truth that whenever there’s trouble in the Gulf region, Shell will be one of the beneficiaries. Unlike the vast majority of companies, soaring energy prices will boost its bottom line.

But commodity prices are impossible to predict with any accuracy. Their volatile nature means nobody knows with any certainty what Shell’s earnings are likely to be from one period to another.

Take the oil price as an example. Looking back to the start of 2005, the average monthly price of a barrel of Brent crude has varied from $18.38 (April 2020) to $132.72 (July 2008). Yes, it’s been over the psychologically important $100-mark during 55 of the past 255 months. But it’s also been below $55 in 50 of them.

Even so, the need for oil and gas, and the sheer size of Shell’s business, means that other than during the most exceptional of times – the pandemic is a recent example – it remains hugely cash generative.

From 2021-2025, it produced an enormous $265.3bn of cash from its operations.

But energy industry infrastructure is expensive and is often funded by borrowing. Indeed, the group’s net debt increased by $6.9bn to $45.7bn during 2025.

Not bad for income

In recent times, the group’s dividend has been pretty good.

From its adjusted earnings per share of $19.03 over the past five years, it’s returned $6.06 to shareholders. In cash terms, its 2025 payout was 62% higher than in 2021.

Although the recent surge in Shell’s share price has pushed its yield lower, the stock’s still paying 3.2%. This is slightly above that of the FTSE 100 as a whole.

However, it’s important to remember that dividends cannot be guaranteed.

My view

Although Shell is a reliable performer, I think there are better opportunities to consider elsewhere in the sector, like BP (LSE:BP).

Although it’s also affected by volatile energy prices and has a large debt pile, it’s part-way through a significant cost-cutting programme. And it’s selling some non-core assets to reduce borrowings.

Under shareholder pressure, BP’s actively seeking to address the fact that it has a lower margin than its larger rival and, even though it generates less revenue, it employs more people.

All companies in the sector will see their revenue move up or down in line with energy prices. But I think that BP, by becoming leaner and more efficient, will outperform Shell — relatively speaking — over the next few years.

And with a yield of 4.2%, its dividend is more generous.

On this basis, for investors who are comfortable with the sector, I think BP could be a stock to consider. But only by those who are prepared to take a long-term view and will be able to ignore the volatile nature of the group’s revenue and earnings.

The post 5 years ago, £5,000 bought 354 Shell shares. But how many would it buy now? appeared first on The Twelfth Magpie.