Image source: Getty Images
I BP (LSE: BP.) share price has been quite volatile over the past few years. But for me, it's an important dividend.
After all, it's hard to think of more cash cows with better records of lining shareholders' pockets year after year.
The current weak share price means we could be looking at a future dividend yield of up to 5.8% this year. And if BP can keep that going for years to come, it could be in for a nice break.
Predictions
What does the future look like for BP shares?
Checking many sources, I see some differences. And compounded by the fact that BP pays dividends in US cents rather than cents, so there's a currency exchange factor there.
If the pound should strengthen over the next decade, those pennies will buy a few pence. It works the other way around too, and a weaker pound can mean greater gains for sterling. But it's an extra layer of danger.
Consensus is currently around 23-24p per share this year. And that means a yield of 5.7% to 5.9%. By 2026, analysts have a dividend of up to 27p per share, bringing the yield to 6.7%.
Share the price
What about stock price predictions? There is an average target of 514p right now, although the range is from 430p to 654p. At 408p as I write, that looks like a solid buy deal.
I always treat the seller's price carefully, though. They often look like little fingers in the air and projections.
But I think they might be worth considering, if only to get a sense of the market behind the stock.
Company vision
The first half of BP this year was highlighted by “strong cash flow performance and low debt ratio“. Cash flow reached $8.1bn, while debt was reduced to $22.6bn.
In the shareholder award, the power continues. As well as raising the dividend by 11%, BP announced a $3.5bn share buyback in the second quarter. That follows from $3.5bn in the first half.
Looking ahead, the company set another priority as refocusing on its bioenergy business. And that reflects the main uncertainty of the long-term future.
The outlook for BP shares appears strong at the moment. But the transition to renewable energy sources piles on that uncertainty.
A revolution
With BP, I think I see a strange combination. I will generally rate the stock as a good long-term buy, but with short-term risk. And that's okay, since I've been around for a long time.
But here, I'm afraid I'm seeing the opposite. I think the prospects for the next few years look really good. But the further I look, the less confident I am.
For that reason, even if I think I might not get a buyout, I would miss BP shares. Oh, and because I don't want anti-oil protesters covering me in soup.
Source link
