Stable Dividend Policies, Stock Repurchases, and Stock Repurchase Plans and Returns

Stock Repurchases
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Stock Repurchases
In this discussion on stock repurchases, an article, 'Royal Dutch Shell finally delivers big stock buyback, but shares break support,' will be summarized, and an analysis carried out in terms of the importance of stable dividend policies, the reasons behind stock repurchases, and how individual financial metrics are specifically affected by stock repurchase plans and returns.
Summary of the Article
Narayanan (2018, July 26) states that despite Royal Dutch Shell not meeting the profitability targets, it is scheduled to offer a $25 billion stock buyback, which is a promise to the shareholders after its acquisition, in 2016, of BG Group. The CEO is quoted stating that its strong balance sheet position and its free cash flow have made it confident to commence the program.
This program is subject to continue given the improved leverage ratios and the promising conditions of oil prices, despite the company recording a profit below that estimated by analysts. The company's stock prices had gone down from $73.95 to $67.76, compared to its peer ConocoPhillips, which slightly went down from $71.81 to $71.80 on the trading day in contrast to the stock prices of the big two oil companies; Chevron and Exxon Mobil.
Chevron and Exxon Mobil's stock prices rose due to the surge in crude oil prices, as the oil companies, including Royal Dutch, invested more resources in the business, mainly in the Permian Basin. Global trade war fears and the U.S.-Iran tensions have led the stock prices of the two oil giants, Chevron, and Exxon Mobil, to tumble slightly.
Importance of a Stable Dividend Policy
A stable dividend policy is important since some investors rely on the dividend as a source of income. The stability of dividend payment is vital as some retired households depend on the dividend income (Baker, 2009). Such a policy also improves a company's image in the stock market; hence, it is important to seek capital in...