Oil giant Royal Dutch Shell (RDSB) is top of the FTSE 100 leaderboard on Tuesday, up 3.1% to £24.35.
The group has used a strategy update to announce plans to cancel its scrip dividend in the fourth quarter of this year and return to delivering the payout entirely in cash.
The move is underpinned by hiked annual cash flow guidance of $30bn, from $25bn, by 2020 (based on an assumed oil price of $60 per barrel).
Now the divi looks more secure investors are swooping on the attractive yield. At today's share price the income yield remains an attractive looking 5.9%.
WHY DID SHELL PAY A SCRIP DIVIDEND?
In the wake of falling oil prices the company introduced a scrip dividend in early 2015, allowing investors to receive their dividend in shares or cash.
Although this reduced pressure on Shell’s balance sheet, by increasing the number of shares in issue it was also dilutive to shareholders.
Shell today reiterates plans to buy back $25bn worth of shares between 2017 to 2020 to compensate for the dilution implied by the scrip and the $54bn acquisition of BG.
