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June 2, 2010

BP Dividends in Jeopardy

by robert hashemian @ 11:37 pm
Filed under: business,financial — Tags: , , ,

As stated in my previous post, that 9.2% BP dividend yield was just wishful thinking. Now comes the word that lawmakers want BP to suspend any dividend payments because obviously the company has gotten one hell of a liability to deal with and paying the shareholders instead of the victims isn't going to sit well with anyone.

While BP shares rose modestly today in sympathy with the rest of the market which had a solid day, the news of the potential dividend cut will not please the investors and generally that's bad news for the stock.

More than likely BP shares will experience weakness tomorrow as a result. Right now about the only thing that can give BP a boost is sealing that oil well. Unless and until that happens the string of bad news will continue for BP.

I do wonder about one thing. If the outlook gets really nasty for BP, as in a risk of insolvency, will the British government step in with a bailout plan? Will the British public be in the mood for any more bailouts? Small chance, but a possibility nevertheless.

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