Is BP Stock a Buy?
Integrated energy giant BP (NYSE: BP) has a huge 5.8% dividend yield and is making big plans to shift its business with the times. On the surface, that sounds like pretty good news all around. But there's more to understand here when you dig into the details a little bit. Here are some key facts to consider before you put BP stock on your buy list.
BP, formerly known as British Petroleum, doesn't have the best track record when it comes to dividends. Roughly a decade ago it was involved in a major oil spill in the Gulf of Mexico. The company changed its name following that event and the financial impact forced it to sell assets (effectively repositioning its business) and cut its dividend. It was a difficult time for the company and its shareholders.
Historically low energy prices in 2020, caused partially by the impact of COVID-19-related economic shutdowns, have pushed BP's bottom line deep into the red. With the anti-carbon zeitgeist today, the company decided to cut its dividend by 50% and embark more aggressively in a new direction (more on this in a second). The cash saved from cutting the dividend will be used to help fund the shift in its business. Except dividend-focused investors have had to, once again, suffer through a dividend cut as BP changes gears. If you are trying to live off of the income your portfolio generates, BP has proven for a second time that you can't really put much faith in its quarterly dividend check.
Source Fool.com
