The company stands a decent chance of maintaining its payout, so long as oil prices can continue to recover. In addition, the company will need to make further cost reductions and pursue significant asset sales to raise more cash.
Management remains committed to the dividend, but many other executives in the energy sector pledged to keep their dividends … until they didn’t.
Investors buying BP stock right now should prepare themselves for the possibility of a significant dividend cut should oil prices stay at current levels. Only brave investors with a stomach for above-average risk should consider buying BP stock and its risky, albeit attractive, dividend.
DISCLOSURE: Bob Ciura personally owns shares of BP.
This article is brought to you courtesy of Bob Ciura from Wyatt Research.