BP - British Petroleum
British Petroleum (FTSE 100 – Ticker: BP) is a well recognised energy company, that is popular with investment fund managers and is known for its regular dividend income.
BP’s core business as we all know and are aware of is within the oil and gas sector. This started over one hundred years ago in Persia extracting and refining oil for public consumption.
It’s history dates back to 1901 and started out known as the Anglo-Persian Oil Company. Striking oil in May 1908 in the Middle East that was said to be the first commercial discovery.
Today some say it is an old fashioned oil and gas business but like many other oil majors, BP has started a major transformation in the way it produces and sells energy.
The company not only extracts the oil but the group operates filling stations globally, BP also manufactures and offers its main “Castrol” branded lubricants and oils.
There are other well known brands like: Aral in Germany, AM/PM Brands in America, as well as it’s Amaco brand in the rest of the USA and other parts of the world.
Here are ten reasons behind my investment thesis for BP back in 2016, where we have a long hold within the portfolio:
1, BP is a FTSE 100 constituent with a strong history in managing a successful business
2, Plans have been laid out regarding the low carbon transformation and process has started towards the long term business model.
3, Delivering in its low carbon commitment in 2019 £500 million was invested in green initiatives. 2020 £750 million was invested in green energy, BP is also projecting increased spending in the coming years.
4, Investments in Wind projects for over 10 years with a 9.1 gigawatt capacity
5, Lightsource BP is a 50% joint interest in solar energy projects
6, In the United States BP is already the largest renewable Biogas supplier in the transportation sector.
7, There are also joint partnership with Quantas to explore sustainable fuels for aviation
8, An ongoing Australian joint Green Hydrogen project with Orsted, as well as exploring further Green Hydrogen production projects from solar energy.
9, A successful tender in the seabed off the coast of Scotland to build a new wind farm.
10, Plans for the UK’s largest production of Blue Hydrogen on Teeside whilst capturing and storing 2 million tonnes of carbon per annum.
As listed above BP is making the transitional investments to move the business forward and is committed to lowering its reliance in fossil fuels by 2050. There are assets and evidence to support this move towards a more sustainable business model.
Our investment case to hold BP is the same as with Shell. That being said we (all) global consumers will going to be using energy for many years to come, so we will require a varied mixture of new sustainable sources enabling us to make a permanent transition away from fossil fuels over time.
This transition can be funded by channelling the a proportion of revenues into new environmentally green projects.
We still believe that BP along with all other oil majors can deliver these new energy sources for our own energy security and needs, whilst making an investment case to support these businesses during this period of transformation.
BP average five year share price
The average share price over the past five years (08/2019 to 08/2024) for British Petroleum sits between:
At the lowest point of £1.88 on 29/10/2020 during the pandemic.
To the highest of £5.67 on the 16/02/2023.
Based on my own personal experience looking at a long term hold, today I would purchase additional shares between £3.75 to £4.30.
I do intend to increase the current holding to between 800 to a 1,000 shares over the next 12-18 months.
The ideal exit strategy would be to hold for 10/15 years with a target sell price of £9.50 to £10.50
BP Dividend
BP distributes a quarterly dividend in the months of March, June, September and December.
For research purposes we have listed the last six years of annual dividends below:
2024 $0.31 cents
2023 $0.28 cents
2022 $0.24 cents
2021 $0.22 cents
2020 $0.26 cents
2019 $0.41 cents
As we can see above some businesses took an opportunity like the pandemic to reset shareholder distributions, in this case it demonstrates just how volatile energy stocks can be.
The latest quarterly (Q1) dividend was $0.08 cents (£0.06p).
(Ex dividend on 15/05/2025) to be paid on the 27/06/2025
Dividend yield of 6.35% (27/06/25).
P/E ratio is 212.86 (27/06/25)
Total income received from holding the shares over 6 years is £965.68
Further dividend analysis can be viewed in the file below:
BP
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