BP halves its dividend
BP has announced a record quarterly loss for the three months to the end of June – $17.7bn – and cut its dividend in half.
BP has announced a record quarterly loss for the three months to the end of June – $17.7bn – and cut its dividend in half, says Graham Ruddick in the Times. BP’s shareholders also have a new strategy to get used to.
This “radical” plan involves transforming BP from an “international oil company” into an “integrated energy company” by boosting investment in low-carbon energy tenfold by 2030.
This is not just a dividend cut, but also a “fundamental change” away from the old “progressive dividend” mantra whereby the payouts “rise no matter what”, says Jim Armitage in the Evening Standard. Instead, cash is returned to shareholders “only when it’s been generated from the business”. This is a “jolly good thing”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
After all, while paying dividends with debt might be “acceptable” if good times are in sight, when they’re not it’s just “bad, risky business”, especially since global demand for oil has been “battered” by Covid-19’s impact on the economy and the shift to renewables.
The market seems to have regarded the cuts as “almost inevitable”, says Ed Cropley for Breakingviews: the implied yield on the shares had risen to 8% before the cut. The move will also free up cash that can be used to reduce BP’s debt to its target of $35bn. So it’s not surprising that the market has reacted positively, with BP’s shares jumping by 7%. Still, changing BP into a “successful green energy company” will be a “lot harder” than many seem to believe, especially as BP is “late to the game” in terms of investing in renewable energy.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Higher rates are disappearing – should you fix your savings?
Fixed savings rates have dropped to their lowest levels in over a year. Should you fix your savings now ahead of a potential base rate cut in November?
By Katie Williams Published
-
Nine million people fall victim to financial scams, says Citizens Advice
The charity says that around one in five people across the UK have been caught out by a finance scam in the past year - here is how to protect your money
By Chris Newlands Published
-
What will a broken-up Google look like?
The US courts have ruled that Google is a monopoly, leaving it facing the prospect of a break-up. WIll that be a good thing?
By Matthew Lynn Published
-
How will the UK gambling sector be hit by the Budget?
There are concerns for the UK gambling sector in the lead-up to the Autumn Budget. What could be on the cards?
By Dr Matthew Partridge Published
-
HSBC returns to cost-cutting plan
HSBC is set to revamp its commercial banking division – but will it come at a cost?
By Dr Matthew Partridge Published
-
Is Brevan Howard Macro a good investment?
Holding Brevan Howard, a world-leading vehicle through an investment trust, offers diversification on the cheap
By Rupert Hargreaves Published
-
How can China boost consumption?
China's new policies may give consumption a cyclical boost, even if long-term gains require more serious reforms
By Cris Sholto Heaton Published
-
Pfizer shares rise as US investor takes $1 billion stake
Pfizer shares are on the up since US activist investor Starboard Value built up a stake in the drug maker. But strategic options appear limited
By Dr Matthew Partridge Published
-
What is the outlook for oil prices?
Oil prices will be set by the face-off between Saudi Arabia and US shale producers. Could tail risks change the possible outcome?
By Cris Sholto Heaton Published
-
A fairer deal for investment trusts
New rules on how investment trusts report costs should ditch the idea that investors only need to look at one number
By Cris Sholto Heaton Published