Maintaining dividends at different oil prices: Total comes out best in Europe

As many of the biggest banks are no longer an option, the world’s big oil companies are now among the best for investors seeking dividend growth.

The pressure to maintain dividend policy is substantial. So far, Shell has promised it would increase dividends ‘in line with inflation’ and BP has already signalled it will freeze its dividend. Austria’s OMV has already cut.

RBS stress-tested European oil majors for their ability to maintain their dividend in different oil price scenarios. The scenario considered their existing dividend levels, and tried to determine the price level at which gearing and credit rating stresses would build. They based this on gearing not exceeding target levels, and preserving a minimum long-term credit rating of AA-.

Here are the results:

“All look resilient but in a forced ranking Total’s dividend appears most secure, followed in order by Shell, BP and Eni,” they write.

RBS has a buy recommendation on all four companies.

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