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BP p.l.c. Message Board

  • lipitor_pfizer lipitor_pfizer Jan 4, 2013 10:51 AM Flag

    Is BP's dividend safe?

     

    Is BP's dividend safe?
    BP raised its quarterly dividend by 12.5% in the third quarter of last year, following a 40% rise in underlying earnings. The move was an attempt to win back the support of institutional investors, but the reality is that BP is still a company in transition.

    In a worst-case scenario, BP could be hit by a $21 billion fine from its Clean Water Act court case and by falling oil prices at the same time. Such a scenario would hit the company hard and would threaten its dividend, making it vulnerable to a takeover bid. However, I don't think this will happen. I expect to see Brent Crude stay above $100 per barrel and I think that a lower fine for negligence, or even a settlement before the case reaches court in February, is much more likely.

    Overall, I think that BP's dividend looks reasonably safe, but is unlikely to grow significantly over the next couple of years.

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