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sagitarius84 (50.44)

Is BP’s dividend safe?



June 14, 2010 – Comments (4) | RELATED TICKERS: BP , STT , USB

The woes of BP’s oil spill are still making headlines these days. After several unsuccessful attempts at capping the oil spill, British Petroleum (BP) is still unable to stop the oil from flowing in the water. With liabilities expected to reach several billion dollars, investors have been selling off BP’s stock, which has caused it to decline almost 50% from its highs in April. The uncertainties regarding BP's future liabilities, have caused the Obama administration to push for a dividend cut, in order to ensure that the company would have the cash to pay its obligations.

Right now British Petroleum (BP) is generating profits in excess of $6 billion/quarter, paying out $2.6 billion in dividends and reinvests the rest in the business. The oil spill so far costs approximately $1.5 billion so far, but the overall liability could exceed tens of billions of dollars. The biggest risk is Continue Reading...


4 Comments – Post Your Own

#1) On June 14, 2010 at 10:54 AM, sagitarius84 (50.44) wrote:

BP is a hold as long as dividends are not cut. What is your opinion on the stock?

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#2) On June 14, 2010 at 11:32 AM, Schmacko (91.11) wrote:

If BP has the liability cap removed, I'd be very suprised if their dividend wasn't cut.

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#3) On June 14, 2010 at 6:45 PM, goalie37 (86.69) wrote:

What I have learned the hard way from dividend investing is that if you are asking if the payment is safe, it's not.

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#4) On June 14, 2010 at 9:55 PM, leohaas (29.78) wrote:

Clearly, the dividend is not safe. It is one of the reasons the stock has dropped so much. Long-term, though, dividends will return to current levels or higher.

Disclosure: long BP at the time of writing

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