High-Yield Oil Play to Own: BP PLC (NYSE:BP)
BP is offering a very juicy 8% dividend yield and is the best of bunch in the Brent business. BP has been a cost-cutting leader among major oil companies. It’s planning to cover all of its capital expenditure spending with cash by 2017.
A lot of the overhang for this stock has been reduced over the last year. This includes the deal to effectively settle all major liabilities related to the Deepwater Horizon oil spill. Now there’s certainty with the outflows from the settlements. So, if there is a positive for BP related to Deepwater, it’s that the company was forced to really rein in costs. This has helped them weather the fall in oil prices nicely.
BP’s dividend remains strong, as the cash outlay for the oil-spill-related payments will be spread out over the next two decades.
While the European oil supermajors offer higher dividend yields than their U.S counterparts, the Shell payout appears tenuous. The best play looks to be BP, which has one of the best cost structures in the business.
This article is brought to you courtesy of Marshall Hargrave from Wyatt Research.