How Long Will BP's Dividend Last?

Posted by D4L | Friday, June 11, 2010 | | 0 comments »

BP is yielding a sweet 8.6%, but before investors plunk down money and buy BP stock for the juicy dividend they may want to ponder if it will last. Dividend-hungry investors have long gravitated to oil stocks because oil companies throw off oodles of cash, but the costs of cleaning up BP's big spill in the Gulf of Mexico, which could run as high as $40 billion, could put the oil giant's dividend in jeopardy.

Besides eating up BP's cash stash for a dividend payout, BP could face political pressure to stop paying billions of dollars to greedy shareholders even as people living near the Gulf see their livelihoods destroyed and tarballs and dead pelicans multiply on the beaches and marshes. Already, two U.S. Senators, Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.) have weighed in, calling it “unfathomable” that the company will continue paying dividends without knowing the extent of the clean-up costs.

Source: Forbes

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