Image source: Getty Images
It’s a funny time to hold BP (LSE: BP) shares. An attractive time in some respects, but also very odd. That’s what I’m finding anyway.
BP entered the millennium as perhaps the ultimate UK blue-chip. But the last 15 years have been bumpy, ever since the Deepwater Horizon disaster in 2010. As well as the subsequent clean-up and compensation costs, the board bungled the green transition, triggered the attentions of activist investors, and stumbled from one bust-up to another.
When there’s been good news, it’s of the wrong type. The BP share price is up a decent 90% over the last five years, but that’s mostly down to two oil price spikes. The first in 2022, following Russia’s brutal invasion of Ukraine, while the other is happening right now, as the Iran conflict drives crude back up again.
Why does it rise when the FTSE 100 falls?
So last week, when the US intensified its bombing campaign against Iran and oil shot to $100 a barrel, BP shares soared. Now the US assault has eased, Brent crude has retreated to $88, and that’s bad news for BP shares which are down 3.5% today.
Even BP investors will take little pleasure in the subsequent share price resurgence, given the grim circumstances. We find ourselves in the strange situation where bad news for the stock market (and humanity) is good for BP, and vice versa. Never an easy place to be.
Many may also be wrestling with the moral case for holding fossil fuel stocks in a long hot summer like this one.
BP shares have done well, despite all their troubles. It’s always good to have a non-correlating asset in your portfolio. They also offer a juicy dividend. Somebody who reinvested every shareholder payout over the last five years would be sitting on a total return closer to 120%.
What kind of dividend income can we expect?
BP shares are forecast to yield 4.68% in 2026, rising to 4.9% in 2027. The board has paused its generous share buyback programme for now, but I’m hoping that will resume at some point.
Despite climbing 35% in the last year the shares still look decent value, with a forward price-to-earnings ratio of 8.1.
However, buying BP today is risky. The share price could go anywhere from one day to the next, it all depends on news flow from the Middle East. In this mixed-up world a peace deal would be good news for the global economy but bad news for BP. There are other risks, aside from commodity price volatility. BP has hefty net debt of $25bn, which is one reason why the buyback has been paused. Another is that the board seems to spend more time in-fighting than building the business.
I still think the shares are worth considering with a long-term view, but given that the next bit of good/bad news could land any second, it might be wiser to drip feed money in.
Should you invest £5,000 in Bp P.l.c. right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bp P.l.c. made the list?
Harvey Jones owns shares in BP.
Image source: Getty Images
It’s a funny time to hold BP (LSE: BP) shares. An attractive time in some respects, but also very odd. That’s what I’m finding anyway.
BP entered the millennium as perhaps the ultimate UK blue-chip. But the last 15 years have been bumpy, ever since the Deepwater Horizon disaster in 2010. As well as the subsequent clean-up and compensation costs, the board bungled the green transition, triggered the attentions of activist investors, and stumbled from one bust-up to another.
When there’s been good news, it’s of the wrong type. The BP share price is up a decent 90% over the last five years, but that’s mostly down to two oil price spikes. The first in 2022, following Russia’s brutal invasion of Ukraine, while the other is happening right now, as the Iran conflict drives crude back up again.
Why does it rise when the FTSE 100 falls?
So last week, when the US intensified its bombing campaign against Iran and oil shot to $100 a barrel, BP shares soared. Now the US assault has eased, Brent crude has retreated to $88, and that’s bad news for BP shares which are down 3.5% today.
Even BP investors will take little pleasure in the subsequent share price resurgence, given the grim circumstances. We find ourselves in the strange situation where bad news for the stock market (and humanity) is good for BP, and vice versa. Never an easy place to be.
Many may also be wrestling with the moral case for holding fossil fuel stocks in a long hot summer like this one.
BP shares have done well, despite all their troubles. It’s always good to have a non-correlating asset in your portfolio. They also offer a juicy dividend. Somebody who reinvested every shareholder payout over the last five years would be sitting on a total return closer to 120%.
What kind of dividend income can we expect?
BP shares are forecast to yield 4.68% in 2026, rising to 4.9% in 2027. The board has paused its generous share buyback programme for now, but I’m hoping that will resume at some point.
Despite climbing 35% in the last year the shares still look decent value, with a forward price-to-earnings ratio of 8.1.
However, buying BP today is risky. The share price could go anywhere from one day to the next, it all depends on news flow from the Middle East. In this mixed-up world a peace deal would be good news for the global economy but bad news for BP. There are other risks, aside from commodity price volatility. BP has hefty net debt of $25bn, which is one reason why the buyback has been paused. Another is that the board seems to spend more time in-fighting than building the business.
I still think the shares are worth considering with a long-term view, but given that the next bit of good/bad news could land any second, it might be wiser to drip feed money in.
Should you invest £5,000 in Bp P.l.c. right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bp P.l.c. made the list?
Harvey Jones owns shares in BP.
