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A Few Jolly Good Reasons to Return to BP

By Malcolm Stacey | Monday 17 April 2017

Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Rattlers. On checking the number of BP shares I hold, I was rather shocked. It’s one of those shares I’ve been gradually building up, whenever I find myself with a bit of share cash and no clear company currently worthy of investment. 

Consequently, with no real reason to sell BP shares, the total has grown beyond my usual limit of 10% of my entire portfolio.

But then holding so many shares is no disadvantage, when I remember that BP’s dividend yield is around 7%. And collecting divis is the way I pay for living expenses, rather than crystallising my share profits.

The BP share price is undervalued in my humble view. Not so long ago, it was well above a fiver, now it’s around 470p. And that lowly figure is despite the fact that the price of Brent crude has been rising nicely in the last week or so.

BP suffered a tremendous set-back in that terrible leak into the Gulf of Mexico, and the legal costs still threaten today.

But the company is on a cost-cutting campaign, which includes reducing its work force by a lot. It’s also building up its reserves, which will be very useful if the oil price continues to rally.

BP has said that 2017 is a big year for it, with seven new major projects coming on stream. They’re expected to provide another half a million barrels of oil per day. Locations include Australia, Trinidad and the Nile Delta.

For what it’s worth, Barclays Bank has set a target of 625p for BP’s share price, an increase of a about a quarter on the current level. And if you get the big divi as well, BP is an interesting buy.

And now to oil my larynx in the Punter’s Return.


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