The Shell (LSE: SHEL) share price has had a bumpy journey, falling 8.51% within the final 12 months. Naturally, it’s not the one power inventory struggling proper now.

The FTSE 100 big’s fortunes are broadly tied to the oil price, and that’s been in retreat currently, slipping to simply above $70 a barrel. Falling demand from China, considerations over the US financial system, and rising stockpiles are all squeezing demand. Tensions within the Center East haven’t offset the development. At the least to this point.

This FTSE 100 dividend development hero will rise once more

The oil and gasoline sector is famously cyclical. Rising oil costs destroy themselves, by hitting demand. Falling oil costs kickstart demand and the entire thing rolls on.

There may be additionally loads of scope for shocks, too, as we noticed in 2022 when Russia invaded Ukraine and oil spiked to $127. It’s down greater than 40% since that peak.

Regardless of the current slide, long-term Shell buyers received’t be too fazed. The share price remains to be up 43.45% over three years. If I’d invested £5,000 in October 2021, it could now be price £7,172.50. In reality, I’d be doing higher than that, after taking dividends under consideration.

Shell isn’t fairly the dividend machine it was. Immediately, the trailing yield is simply 3.99%. That’s decrease than the 5% or 6% I used to see.

But it’s nonetheless eager to reward shareholders, when situations permit. In 2022, Shell elevated its whole dividend by 21% to 80.47p per share, then by one other 25% to 99.53p in 2023. That’s spectacular development, even when the 2024 dividend was lower to 79.99p. It has additionally lavished buyers with billions in share buybacks.

The oil price received’t keep low endlessly

Three years in the past, with the Shell share price at 1,749p, my £5k would have purchased me 285 shares. My back-of-fag-packet-calculations counsel I’d have bagged round £850 of whole dividends since then, assuming I reinvested the lot.

This could have lifted my whole return to round £8,000, a return of 60%. Which isn’t too shabby, when you ask me.

Shell seems to be fairly respectable worth right this moment, buying and selling at 7.88 occasions trailing earnings. Its price-to-sales ratio is 1.13 occasions. Meaning buyers are paying £1.13 for every £1 of revenues it generates right this moment. Low-cost however not dust low cost.

The 16 analysts following the inventory are pretty upbeat, with a median one-year price forecast of three,102p per share. If right, that’s development of 20.86% from right this moment. Good. In fact, no person can say for certain the place Shell will go subsequent.

As ever, a lot will depend on the oil price. Shell has a reasonably large security internet, provided that it could actually break even with the price of oil at round $40 a barrel. However the decrease oil falls, the extra sentiment will slide. With Saudi Arabia rumoured to be growing output, it may have additional to fall.

Within the quick time period, the Shell share price may go anyplace. The long-term outlook stays robust, in my opinion, because the world consumes ever extra power. Buyers have performed effectively over three years. Over 5, 10, or 15 years, I’d count on them to do so much higher. Though personally, I’m backing BP. I couldn’t resist its extra beneficiant 5.52% yield.