BP To Announce Dividend Suspension Next Week
- June 11, 2010
- Dividend Investing, Dividend News, Dividend Stocks, High Yield Dividend Stocks
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Next week we should finally get clarity on BP’s dividend. It has been widely speculated that BP would be forced to suspend their dividend program given the political pressure they are facing to do so.
BP has been leaking (anonymously) that the Board will meet on Monday to discuss dividend options. The most likely option appears to be for BP to put the dividend cash into an escrow account instead of paying shareholders. That will keep the option open to payout those dividend payments retroactively once the cost of cleaning up the Gulf oil spill is known.
An official announcement about the dividend plan will probably not come until later in the week. On Wednesday, BP Chairman Carl-Henric Svanberg is scheduled to meet with President Obama. Since the driving force for this dividend suspension is coming from the White House, BP will likely want to get their blessing before making any public announcement.
BP currently pays out over $10 billion each year in dividend payments and their falling stock price has pushed their dividend yield above 9%. This would normally be a strong buy signal since BP is the fourth largest company in the world with a very solid balance sheet. However, investors have been rightly pessimistic that they will actually receive future dividend payments. The lack of dividend investors and bargain hunters has only magnified the recent sell-off in BP’s stock.
