We recently published a list of 12 Best Fortune 500 Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where Shell plc (NYSE:SHEL) stands against other best Fortune 500 dividend stocks to buy right now.
Compiled and published by Fortune Magazine, the Fortune 500 is an annual list that ranks the biggest US companies by revenue. In total, the Fortune 500 companies represent two-thirds of the US GDP with $18.8 trillion in revenues, $1.7 trillion in profits, and $43 trillion in market value (as of March 28, 2024), and they employ a workforce of 31 million around the globe.
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2024 proved to be a big year for large-cap stocks, as the broader US market achieved gains of nearly 25%, piggybacking on a 26% performance the year before. Large-cap stock funds, with the heaviest tilt toward growth stocks, performed the best last year, even as the market’s rally somewhat broadened from the handful of mega tech companies that have led much of the bull market.
However, the tailwinds that propelled the market to new heights are beginning to recede, as the rate of monetary policy easing slows down, long-term interests swing upward, inflation becomes sticky, and the US economy is slowing down. Moreover, the upcoming presidency of Donald Trump and his much-rumored tariffs could also herald a more volatile period for markets, as they could further fan inflation fears and put pressure on stock prices.
That said, the expected upcoming fluctuation isn’t going to be something that the mega corporations haven’t dealt with before. A 2023 report by J. P. Morgan revealed that despite the considerable volatility during the period, large-cap stocks gained around 162% between 2013 and 2023, galvanized primarily by big tech. Another 2023 report by CNBC unveiled that large US companies outperformed other investments between 2003 and 2023, with average returns of 9.3%. However, it hasn’t always been a smooth ride, as despite the stability and reliability large-cap stocks are known for, investors had to survive drops of 56.8% during the 2007-2009 bear market, 33.9% in 2020, and 25.4% in 2022.
In addition to the few tech giants regularly making headlines with their gains, large-cap dividend stocks could also be an attractive option for investors looking for a reliable, significant, and growing stream of income. According to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, the broader US large caps are expected to post an 8% increase in dividend payments in 2025, compared to the 6.4% uptick in 2024, 5.1% gains in 2023, and the 10.8% increase witnessed in 2022.
Large-cap companies tend to have more robust balance sheets compared to their smaller counterparts, enabling them to navigate through market fluctuations more smoothly while also returning value to their shareholders. Corporations in the US have continuously grown their considerable cash stockpiles since the beginning of the pandemic, thanks to the economic resilience we have witnessed recently. A report from treasury advisory firm Carfang Group revealed that as of Q1 2024, US corporations increased their cash holdings to an all-time high of $4.11 trillion, up 12.6% from the same period in 2024 and $1.28 trillion more from their pre-pandemic levels.
Methodology
To collect data for this article, we referred to the top 50 companies among the Fortune Global Rankings. Then, we picked out 12 US-listed companies with the highest dividend yields as of January 13, 2025, and ranked them by their number of hedge fund investors according to the Insider Monkey database as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A gas refinery lit up against the night sky, showing the scale of the company’s petrochemical operations.
Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 48
Dividend Yield: 4.24%
Market Cap: $197 billion
Shell plc (NYSE:SHEL) is one of the largest oil and gas companies in the world, operating through the following segments: Integrated Gas, Upstream, Downstream, and Corporate.
Shell plc (NYSE:SHEL) is also transitioning towards a low-carbon future and announced last year that it would invest $10-15 billion into low-carbon energy solutions by 2026. However, the company has come under fire after its Q3 2024 investments in renewable energy fell to 8% of its overall capital expenditure, down from 9% in the previous quarter. Shell is also stepping back from new offshore wind investments and is splitting its power division following an extensive review of the business that was once seen as a major driver of the oil major’s energy transition strategy. The decline in green energy investments comes after the oil major weakened its 2030 carbon emissions reduction target in March last year.
However, Shell plc (NYSE:SHEL)’s investments in its traditional fossil fuels business continue and the company announced recently that it has started production at its offshore Whale floating facility located in the Gulf of Mexico, further enhancing its portfolio in the region. Moreover, it was also recently announced that Shell and Norway’s Equinor are to combine their UK offshore oil and gas assets and expertise to form a new company which will be the UK North Sea’s biggest independent producer.
Shell plc (NYSE:SHEL) is also the top global lubricant supplier and number one globally in liquified natural gas (LNG), a sector that is expected to grow substantially over the coming decade. However, the company recently trimmed its LNG production outlook for the fourth quarter of 2024 and warned that trading in its gas and chemicals divisions would be ‘significantly lower’ than in Q3. Moreover, Shell plc (NYSE:SHEL) is also poised to take a non-cash, post-tax impairment of between $800 million and $1.2 billion on its renewables business (linked to European and North American assets) in Q4 2024.
Despite the tough macroeconomic situation faced by the oil and gas industry, Shell plc (NYSE:SHEL) announced at the end of Q3 2024 that it would buy back a further $3.5 billion of its shares until the end of 2024 while holding its dividend unchanged at $0.34 per share. This marked the 12th consecutive quarter that the oil and gas giant had announced at least $3 billion in buybacks.
Shell plc (NYSE:SHEL) has also been included in our list of the 10 Best FTSE Dividend Stocks to Buy Now.
Overall, SHEL ranks 10th on our list of best Fortune 500 dividend stocks to buy right now. While we acknowledge the potential for SHEL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHEL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.