"We view the share as a core holding for any blue-chip income geared portfolio," he said. "Currently the dividend yield stands at just under 5 per cent. The group has also benefitted from the rise in the oil price and cost-cutting measures, which have so far delivered $3.5bn of savings."
"Updates over the 16 months have generally been viewed positively and the group has started to benefit from restructuring, which focused on cost efficiency and recovering demand, especially in Asia."
According to FE Analytics data, Royal Dutch Shell has returned 48.38 per cent in the last five years. The average FTSE 100 company has returned less than half this figure.
Performance of stock vs index over 5-yrs
Source: FE Analytics
Spooner anticipates this level of outperformance to grow in at least the medium-term.
"The management has growth plans that could increase cash-flow by 50 per cent by 2012 if oil averages $60 a barrel and by 80 per cent at $80 a barrel," he said.
"We are happy to go along with the CEO's [Peter Voser] comment: 'There is more to come from Shell.'"
The company appears on The Share Centre’s buy list, and is one of the highest-rated stocks. Of 36 brokers, 22 view Royal Dutch Shell as a strong buy, three view it as a buy, nine are neutral and only two think investors should sell.
This popularity is also reflected in the fund management industry. According to FE Analytics data, of 2,679 funds in the IMA unit trust and OEIC universe, 407 – or 15 per cent – hold the stock in their top-10.
Royal Dutch Shell appears in the top-10 holdings of more than half of the 101 UK Equity Income funds, including the £3.9bn Artemis Income fund.
Fifteen funds have more than 8 per cent of their portfolio invested in the stock. JPM UK Managed Equity, which has £269m assets under management (AUM), has a 10 per cent weighting to Royal Dutch Shell.
According to FE Analytics data, the fund has returned 12.93 per cent in the last three years, underperforming its FTSE 100 benchmark and UK All Companies sector average by around 12 per cent.
Performance of fund vs sector and index over 3-yrs
Source: FE Analytics
Forty-one investment trusts also hold Royal Dutch Shell in their top-10, including the Invesco Perpetual Recovery Trust, which has 12.7 per cent of its portfolio invested in the stock.
Spooner recommends that UK investors buy the B-class share of the stock, as they are not liable for Dutch tax.
Royal Dutch Shell’s activities range from oil exploration and production, through oil refining and into chemicals, gas and power.