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I always like to look at the dividend as a proportion of earnings per share. If they continue to pay 60 cents a quarter that is $2.40 a year. Their earnings when oil was higher were $2.98 a share or ~81% of their earnings. You really like to see a dividend payout that is less than 50% of earnings or at the very least less than 60% of earnings.
Short term, BP's dividend should be safe, however if oil prices stay this low long term, they could very well cut it. I have a small position in BP and have been reluctant to add too much to it because of this, even at the current low valuation.
Short term, BP's dividend should be safe, however if oil prices stay this low long term, they could very well cut it. I have a small position in BP and have been reluctant to add too much to it because of this, even at the current low valuation.
It's amazing to think a company could let 200 million gallons of oil spill into the ocean, be fined billions of dollars, and still be profitable. They took the BP letters out of their gas station logos and Floridians keep lining up to hand them money. Pretty sad....
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