September 29

Adding More Oil With BP

This content was saved from the old website, in case anyone was still looking for it (with the help of

Last Friday I added a new stock to my Investment Hunting portfolio. I keep saying I am too deep in oil, but the market keeps offering great deals in the energy sector.  I may add KMI later this week if the stock continues to fall.  After that purchase, I am probably done buying oil stocks this year.  I decided to buy share of BP. I bought 75 shares of BP stock at $30.43 per share, totaling $2,291.65. This purchase adds $180 to my annual dividend income.

BP Overview

BP p.l.c. (BP) is an integrated oil and gas company. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items, including paints, clothes and packaging. The Company operates in three business segments: Upstream, Downstream and Rosneft. The Upstream segment’s activities include oil and natural gas exploration, field development and production; midstream transportation, storage and processing, and the marketing and trading of natural gas, including liquefied natural gas (LNG), together with power and natural gas liquids (NGLs). The Company’s Downstream segment’s activities include the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers. BP’s interest in Rosneft, an oil company in Russia, is reported as a separate operating segment. Source:

To learn more about Union Pacific Corporation visit the About BP section of the company website.

Below is a visual representation of BP as of December, 2014.

BP Dividends And Dividend Growth Rate

  • Annual Dividend Yield of 7.89%
  • 5-Year Dividend Per Share Average of $1.81
  • 5-Year Dividend Yield Average of 4.26%
  • 3- Year Dividend Growth Rate of 12.2%
  • 5- Year Dividend Growth Rate of -6.7%
  • 10- Year Dividend Growth Rate of 3.6%

The chart below shows the past eight years of annual dividends for BP. BP cut dividends by 75% in 2009.  Since 2010, BP has increased its dividend, with a 3-year average increase of 12.2%.  Time will tell if BP will continue the increase in today’s turbulent energy climate.  However, I am hopeful the dividend will stay static for now and increase once the energy sector recovers.

BP Valuation

S&P Capital IQ ranks BP as 3-stars, a hold with a fair value calculation of $31.20 and a 12-month target price of $38. Morningstar ranks BP as a hold, 3-stars with a fair value of $33. Argus ranks BP as a buy with a target price of $42.
Based on these estimates, I’d say I am not getting an amazing deal, but I am buying the stock at a fair value.  For the year BP is down 22.27%.


The energy sector has taken a beating in 2015.  I am betting that by the end of 2016 recovery will be in sight.  In the meantime, I have added energy stocks to my portfolio.  BP now sits alongside CVX, COP, KMI, and NOV in my portfolio.

What do you think of my BP buy? Which stocks are you buying?

Full Disclosure: Long BP


You may also like