XOM or RDS-A

Both XOM and RDS.B

I asked on here a while back a similiar question and was basically told Exxon has much more cash and less debt Nd the Shell BG deal is bad for Shell

If you sell the A shares for a profit there is an additional tax on them.

Both are the top of my list as far as energy names right now. XOM is far less risky right now, but you have 1/3 of the dividend yield. RDS-B (do not buy RDS-A as a US investor) has a slight chance of dividend cut, but if it doesnt, you get nearly a 10% dividend yield on cost to start which is outrageous.

I bought some b shares this summer in my roth(first stock i ever bought!) The dividends reinvested automatically in A-shares. Is this normal?

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Why B over A?

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RDS-A = American Depository Receipt

Key difference is B is permanent establishment in The Netherlands and its dividends tax is key difference. They trade at a delta, and delta is primarily the result of this tax.

Future is bright for Shell.

Technically, I cannot. I may or may not be an employee in a position that may or may not prevent me from articulating this point.

I would do not put more than 5% of total portfolio in your company's stock.

The crooked E taught me dat (Enron).

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Key difference is B is permanent establishment in The Netherlands and its dividends tax is key difference. They trade at a delta, and delta is primarily the result of this tax.

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RDS-A has the dividend tax withheld. This is the second time recently you've attempted to spread this misinformation. Please stop.

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As easy as A, B see?
Royal Dutch Shell has two classes of share listed on the London stock exchange. One has the ticker "RDSB", and you'll find this ticker quoted in articles here on the Motley Fool. The other class of share has the ticker "RDSA".

The shares carry identical economic rights, but their cash dividends come with different tax implications. The A shares have a Dutch source for tax purposes and are subject to Dutch dividend withholding tax (15%), whereas the B shares have a UK source for tax purposes and are not subject to any withholding tax. Also, cash dividends on the A shares are paid, by default, in euros; cash dividends on the B shares are paid, by default, in pounds sterling.

I've heard of many novice investors over the years -- and some more experienced ones! -- who inadvertently bought the A shares when they'd intended to buy the B shares.

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Even if you have RDS-A shares you can write the foreign taxes paid off on your tax return, but if its held in an IRA then you're screwed. US investors should stick with RDS-B in my opinion.

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I'm a little confused as to why U.S. based Shell employees are forced to buy A shares as part of the stock plan.

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I don't know. What I can tell you is that RDS-A comes from the main business that was located in the Netherlands. While RDS-B originates from the shipping and transport portion of the company that was based in the UK/Wales. I'd assume this is the reason, but it's only a guess.


Also just to clear up things with BayouSizzle.

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New York
To make it possible for investors in the United States to own shares in the company, Royal Dutch Shell worked with an investment bank, The Bank of New York Mellon, to create a special type of financial instrument. It deposited shares of the Class A and Class B stock with the bank, then issued receipts against these as proof that they were there (called American Depository Shares, or ADS). Those ADS were these packaged into new securities called American Depository Receipts (or ADR).

Each ADR represented 2 shares of the underlying Class A or Class B stock. Dividends are paid in United States dollars.
•The Class A ADR trade on the New York Stock Exchange under ticker symbol RDS.A.
•The Class B ADR trade on the New York Stock Exchange under ticker symbol RDS.B

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Edit: Also of note:

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How the Royal Dutch Shell Scrip Dividend Program Works

If the Class A ADR look like a better deal at any given moment, you can get around the Dutch withholding tax by signing up for the Scrip dividend program. Basically, Royal Dutch Shell will agree not to send you any cash, and instead, deposit additional shares of the Class A ADR as a stock dividend into your account. This will exempt you from the 15% Dutch withholding tax. The bad news is, the IRS will still want its 15% dividend tax in April, which is unfortunate because most of the time, stock dividends are tax-deferred. The reason the Scrip dividends are taxes is because you had the option of getting cash if you wanted it, which is enough for the tax man to argue that it was actual income rather than a deferred capital gain.

(For some investors, in some countries around the world, you can use the Scrip dividend program to defer taxes on your Royal Dutch Shell dividends for years when held in a regular taxable brokerage account; even decades. Were us Americans only so lucky.)

Still, you could use this as a mechanism to take advantage of a rare market dislocation in a tax-deferred account, such as an IRA. If you suddenly woke up to a world where the Class A shares were trading at a decided disadvantage to the Class B shares, you could buy the Class A shares in your IRA, sign up for the Scrip dividend program, then get the higher yield in this hypothetical alternate reality without paying any taxes to the Dutch or U.S. governments; instead of dividends, you’d see fresh, newly minted shares of the Class A ADR deposited into your account. If you ever wanted to stop reinvesting the dividends, you could just sell the Class A ADR and swap them into Class B ADR, which would have no tax consequences because you were doing it in a retirement fund.

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