Can Shell (LSE:SHEL) shares keep growing their dividend through 2027 and 2028 while oil prices remain unpredictable? For UK income investors, the question matters.
The oil major is a FTSE 100 heavyweight, yet its dividend is declared in US dollars. That adds an extra angle to any dividend forecast, as the pounds received can move with the exchange rate.
Let’s take a look.
What Shell has promised
Shell’s board aims to increase the dividend per share by around 4% every year, subject to approval. That’s a progressive policy rather than a fixed pledge, but it gives investors a clear starting point.
The company also targets total shareholder distributions of 40%–50% of cash flow from operations through the cycle. That includes both dividends and buybacks, working together to boost value through share count reduction and attractive payouts.
The latest Q3 quarterly dividend announced on 29 October 2026 was set at 39c per share. So that’s our baseline for any 2027 and 2028 estimate.
What 2027 could look like
If Shell follows its stated 4% growth aim, the annual dividend could rise from an estimated 155.9c per share in 2026 to about 163.1c in 2027. Most of the analysis I’ve reviewed expects a yield of roughly 3.11% at that level.
The sterling amount isn’t fixed yet. Shell announces dollar dividends first, then sets the pound and euro equivalents closer to payment. UK shareholders normally receive sterling unless they elect another currency.
So, can the company afford another increase?
What 2028 could look like
Applying the same 4% policy growth rate suggests a 2028 dividend of about 170.5c per share, with consensus pointing to a yield near 3.27%. As always, that’s just a projection based on current policy, not a guarantee.
Plus, we need to account for buybacks. Shell announced a $5bn buyback alongside its third-quarter results, and repurchases reduce the number of shares over which the dividend is paid.
Buybacks often help support dividend growth even if cash flow remains flat.
Shell also expects cash capital expenditure of up to $22bn a year in 2027 and 2028, below its expected $25bn ceiling for 2026.
Less spending could mean more money left over for dividends.
Is the dividend safe?
Shell’s third-quarter cash flow from operations was $21bn, while shareholder distributions totalled $5.3bn, including $2.2bn of dividends and $3.2bn of buybacks.
That’s fairly comfortable coverage in the current quarter.
The company has also said its commodity-price break-even is around $40 per barrel. If that remains accurate, the dividend has a meaningful buffer if oil prices weaken.
Some analysts see room for faster dividend growth later in the decade, but the base case remains on target: 4% annual growth.
The risks
Volatile oil and gas prices remain the biggest variable, which adds uncertainty to any forecast. A sustained fall would reduce operating cash flow, but Shell’s low break-even provides protection.
A stronger pound would also reduce the sterling value of dollar-denominated payments. Project delays and cost inflation could also add pressure.
Long story, short: the 4% commitment is a decent guiding point but far from an exact science.
Still, with consensus pointing to moderate growth and yield of near 3.3% by 2028, the stock is worth considering as part of wider income portfolio.
Just be realistic: if oil prices swing, the outlook could change drastically.
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Mark Hartley does not hold any positions in the companies mentioned.
