Royal Dutch Shell PLC (A) (RDS.A)

The class B shares have a Dutch withholding tax on dividends, which makes class A shares more valuable. Integrated energy stocks have under-performed. He is not in love with energy. Russian sanctions may actually induce Russia to produce more, putting downward pressure on oil prices. He would lean more to E&P and drillers instead.

If you are going to invest new money into the energy area he likes international companies more than Canadian. But Shell is a little different because they made a conscious decision a couple of years ago to become more a natural gas than an oil company. Longer term outlook for Liquified Natural Gas is good. A cyclical name.

He thinks it is a good hold. He thought the Saudis would have raised oil prices above $70 to support the IPO of Aramco. However, the US shale producers are not allowing that to happen. This company is a good hold if you like the dividend. It is better than holding a Canadian energy stock, where markets continue to go down. He is unsure about what is their future. Yield 5%.

An incredibly big global company. It's hard to see how a company like this can get the rate of return he is looking for. Over time they have sort of compounded a 4%-5% return. It’s very difficult for them to grow because they are so big. This is not inexpensive. There are more interesting things in Canada from a consistency and profitability point of view.

A global energy stock to invest in? He owns Royal Dutch Shell (RDS.A-N) and Statoil (STO-N). The large super majors are cash flow positive now, and there is even a possibility that dividends are going to rise. If you take a 3-5 year view and don’t wholeheartedly buy into electric cars taking over the world, there is some upside here. Royal Dutch Shell is a good name.

Oil prices should grind their way higher in the next couple of years. Shale does not produce a real return for investors so he thinks it will fade away. The gasoline engine will take 50 years to fade away. He owns SU-T and CNQ-T. If you are in early you are going to make a lot of money.

Chart has a very nice formation that he really likes. There was a nice consolidation from 2015 through to and including 2017. It had a lid on it at about $57-$58, and then it broke out. You have a level of sellers that will come in somewhere around $60, and if we can break through that, then we could reach old highs.

He likes energy right now. The general trend is not too bad. It will probably move back up to its resistance level.

He is zero weighted in energy. They have been ramping up their debt over the last 10 years and have made little progress on their reserves. They have been borrowing money to pay their dividends. If you want to play oil, you want a company that can get you production and reserve per share growth.

The motivation over the last little while was when they bought DG Group, which was mostly LNG. The CEO expected peak demand would be in 2025, but has now moved it out 2030, where we will have more than enough oil and renewable energy which will keep the price of oil fairly low. They are using borrowed money to pay for the dividend. What they sold in the oil sands is going to go towards paying down debt so that they can get the dividend payout ratio down lower. Their future focus is going to be on natural gas. LNG and biofuels. He wouldn’t have any issue with somebody buying this, but be aware that if they don’t get asset sales for paying down the debt, they may have to cut the dividend at some point.

Royal Dutch Shell (RDS.A-N) or Total (TOT-N)? He prefers Shell. Both companies are so large and diverse that you can’t even call them heavy oil. They are both a bit sleepy and are never going to blow you up, but they don’t move as much as some others. If you are just looking for something that pays a really strong dividend, this is probably a good entry point. Dividend yield of about 6.5%.

He is constructive on oil and thinks prices will do better this year. For the very first time, this coming quarter you are going to get really strong year-over-year comparisons in energy, so energy is a good place to be. This one tends to be a more defensive, but in this environment it is going to do just fine. It wouldn’t be his 1^st preference, especially when you have a company like Suncor (SU-T) in your backyard.

He is taking a harder look at this sector. His favourite of all the oil majors is Total (TOT-N). It has the best growth profile. Fully integrated, as it has refining as well as the retail business, which has been a saviour during the difficult period. As we enter into a period where we think oil prices are going to start to normalize, this has exposure being fully integrated with both upstream and downstream. Shell also has a full integrated model, so it too should be well positioned.

A world-class oil and natural gas company. Feels the dividend is safe. He likes this and thinks oil is going to go up to around $60.

In a recent earnings call, the CEO said he is more concerned about peak demand then peak supply. This caught his ear, only from the standpoint that everybody is thinking about this resurgence in oil, pumping and watching prices going high, worried about OPEC and about getting oil back to $100 a barrel. Alternative sources of energy, whether wind or solar, is coming, we just don’t know when. When it comes, it is going to hit hard and have an impact on oil stocks. The dividend on this is safe as they have plenty of cash flow to cover it.