BP Officially Suspends Dividend
As expected, BP announced today that the company will officially suspend their quarterly dividend in the wake of the Gulf oil spill disaster.
Speculation had emerged last week that a dividend suspension was imminent from BP. Shares in British Petroleum stock had fallen 15% in the last few days, but were up nearly 3% following the dividend announcement.
The dividend payment will be suspended for the second and third quarters and the previously announced June dividend payment has been cancelled. In addition, the oil giant has agreed to establish a $20 billion escrow fund to handle costs from the ongoing Gulf oil spill.
BP did state that the company remains “remains strongly committed to the payment of future dividends and delivering long term value to shareholders.” They also left open the option of restoring their dividend payment in 2011.
If history is any indication, BP’s stock price will likely bottom out in the next few days following this dividend suspension.