July 5

Is the 15% dividend yield on BP shares safe?

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images. Enter Your Email Address Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Over the past few weeks, the BP (LSE: BP) share price has plunged in value. After these declines, BP shares now support a dividend yield of 15%. That’s more than double the market average.The big question is, can investors rely on this market-beating income stream, or should you be looking elsewhere for income?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Lower production costsThe oil giant has been hit by a double gut punch this year. First of all, the coronavirus outbreak has slammed demand for oil and petroleum products around the world.And secondly, the decision by Saudi Arabia and the rest of OPEC to increase oil production at such a sensitive time has sent the price of black gold plunging to a multi-decade low.The good news is that BP is, to some extent, already prepared for this market. When the oil price last crashed in 2014, the company undertook a massive restructuring program, cutting costs across the board.These actions have positioned the company well for the current market. At the beginning of 2018, the business told investors that its average unit production cost was down 46% since 2013.BP’s then head of upstream, Bernard Looney, claimed that the group’s global production costs had fallen from around $13 a barrel in 2013 to $7 for 2018.The average cost of production varies from region to region. However, reports suggest that the company’s cost of production in the North Sea is less than $15 a barrel. That’s down from more than $30 in 2014.These numbers imply that even with oil trading below $30 a barrel, BP is earning a profit on every barrel it produces. That said, these figures exclude other costs, such as exploration spending, maintenance and head office costs.Still, the amounts show BP has the capacity to endure the current market environment.BP shares on offerAt this stage, it is not very easy to say if BP can maintain its dividend at the current level. Nevertheless, the company has plenty of options. As noted above, production costs are low, which should help the firm continue to cover basic costs.If the oil price downturn persists for an extended period, management will have to cut costs further. They will also need to reduce capital spending. In this scenario, the dividend could be for the chop, although before eliminating the payout entirely, BP might turn to a scrip alternative.The company did this in the last oil price crash. Rather than paying investors in cash, it offered shares instead. These actions reduced pressure on the group’s balance sheet and cash flows.When the market had settled down, the group resumed cash payouts.It seems likely that it will use the scrip alternative this time around as well. The company might also cut the overall distribution. A 50% cut would still leave BP shares yielding 7.5%.A combination of both will allow management to continue rewarding investors while keeping the balance sheet in order.As such, it looks as if BP shares will remain attractive from an income perspective.center_img “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Is the 15% dividend yield on BP shares safe? Rupert Hargreaves | Sunday, 22nd March, 2020 | More on: BP Rupert Hargreaves has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Rupert Hargreaveslast_img

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Posted July 5, 2021 by admin in category "hygbieoj

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