Once again the saga continues. After reading yet another article about how the dividend was at risk for Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B), it reminded me of why I am in this name to begin with. Make no mistake, the last year and a half has been very rough. The headline numbers on earnings drive fear over the dividend. Now I have read a number of the so-called dividend at risk articles, but I must say this one was at least backed by objective research and not simple regurgitation of quarterly reports. In other words, it wasn’t a simple “earnings didn’t cover the dividend so it will be cut” article. While there was certainly some of that language, I credit the author for an objective analysis and found the author’s dividend safety index to be rather interesting. Bottom line from the piece? The dividend was deemed one of the most risky out there. However, the discussion failed to take into account some key pieces of data.

Let us be clear. The dividend is the only thing keeping the stock at current levels. Shareholders would be crushed if management sliced it. Management would be rushed to the exit. This stock is a staple of millions of pensions and retirement accounts. I think folks underestimate the importance of this company to European retirement accounts. Of course, it makes fiscal sense to say “hey earnings are down so the dividend is at risk.” Yes, the company is taking on debt and slashing costs everywhere. But I will put substantial bets on management borrowing until bankruptcy court to fund it, waiting for the eventual rebound. That is my massive gamble. There are no sure things, but this is where I’d be placing my chips if I were a betting man. And managing a portfolio, well, by definition I am.…….READ MORE

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