BP’s 4.4% Dividend Yield: Enough to Bet on Low Legal Costs, Profit Growth?
The BP (BP) dividend, though barely more than half the oil giant’s peak payout, is yielding 4.4% or so on a stock price beaten down by the Gulf of Mexico oil spill of 2010.
With interest rates so low, investors are searching for yield, and oil stocks aren't a bad place to look. Exxon (XOM) yields 2.6%. Chevron (CVX) 3.3% and ConocoPhillips (COP) 4.7%. Of course, one wants the underlying stock to do well, too, and that's a reason to wonder about the prospects of a BP turnaround.
BP Dividend data by YCharts
Not a pretty stock chart:
As the Wall Street Journal wisely notes this week, BP is running behind some competitors in production and profit margin, and that’s not the sort of thing an oil giant turns around in a few quarters. Also, it faces huge legal costs from the spill and deaths in the Gulf.
The question for income-hungry investors is whether BP, over time, regains its stride, allowing it to return to a far higher payout. If so, buying at today’s price could produce a lush dividend yield a few years hence.
In the meantime, Royal Dutch Shell’s (RDSA) dividend yield is actually richer than BP’s is, and it has meaningful momentum in production and profits.
RDSA Dividend data by YCharts
From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.
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