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BP Plc. (NYSE:BP) has been in the news for many reasons lately. They are a news staple (and scapegoat) for politicians, environmentalists and attorneys, each looking deep inside the big oil company's deep pocket for their own respective purposes. Since the Macondo incident BP has taken heat from all sides all the way up and down the chain of command, from the ousting of the former CEO to the boycotting BP gas stations. The company has experienced quite a shakeup in the last few years, and investors are nervous about the future of the company. I'd like to extrapolate out a few years in the future and have Future Ryan take a look around.

Currently with revenues of $400B a year, revenue isn't the problem. The biggest focus in the future will be earnings, specifically margins which are the biggest driver for BP's earnings. When BP gets its operating margin to stabilize above 10%, it will be generating over $30B a year in net income, aka profit. Owning nearly 20% of Rosneft, the Russian oil company (remaining 80% owned by the Russian government) which includes direct or indirect access to Russian oil, should be more lucrative for BP than TNK-BP was. With earnings looking good and as Future Ryan watches Macondo fade farther into the rear-view mirror, lets take a look at dividends.

BP reinstated its dividend in February of 2011 at $.42/qtr, which was half of the $.84/qtr it was paying before it was cut. It stayed at $.42/qtr for 4 quarters until it was bumped $.06 to $.48/qtr in February of 2012. It stayed at $.48 for 3 quarters until it was bumped by $.06 to $.54/qtr. It remains at $.54/qtr today and has been for the last 3 quarters. If history is any guide, the next few years BP will continue to raise dividends by $.06/qtr. Look out a few years with increases every 3 (or more likely 4) quarters the dividends grow from $.60/qtr into 2014, $.66/qtr into 2015, $.72/qtr into 2016, $.78/qtr into 2017, and finally back to $.84/qtr in 2018, exactly where they were 10 years ago.

However, for many years BP was raising the dividend more than once a year, and they may continue to do that, perhaps getting back to $.84/qtr sooner than 2018. But here is the real fun part, in 2008 shares were trading in the $60/70 range, you can pick up shares now for a little more than half of that now, about $43 currently. Shareholders today that hold until 2018 will have collected at least $15 in dividends! Exxon Mobil (NYSE:XOM) will most likely have similar results, but you would have to buy roughly the same amount of shares, at $92 for XOM vs. only $42 for BP. Would Future Ryan have wanted me to buy $15 in dividends with $92 or with $42?

From another vantage point, a favorite of mine championed by Buffett himself, we will look at book value. A share of XOM has current book value of <$38/share, whereas a share of BP has current book value of >$40/share. Buying shares of BP now while its trading within 10% of book value is in all likelihood one of the best decisions I could make today for Future Ryan, a very contrarian long term investment.

I know many people think that so much oil spilled out from Deepwater Horizon that it was the worst such event in human history, but a look at the largest oil spills in history puts it in another perspective. By at least three ordersor magnitudes. The ocean's bleed millions of barrels of oil a year naturally as well.

This week the U.K. ambassador to Algeria says BP is committed to the country despite the recent terrorist attack there. The news isn't so important, its who presented it, an ambassador. Its nice to know the company I own has their own government and ambassadors on their side, committed to helping them all over the globe. Almost 10% of dividends from the FTSE 100 came from BP before the spill. That's a lot of mouths BP fed for the country of England, and England is helping BP get back to being a shining star for the country. When big companies have PR disasters in the US the government usually tries to bury the company or distance themselves, so its nice to see that an entire country, from politicians to pension funds have a vested interest in BP's survival and success.

Even if BP gets an unfavorable ruling on Macondo, they will still survive and move on. I will buy more shares if they drop below $40 again. I have written previously on what companies I think are wonderful and why here. How many people thought XOM was a bad investment after the Exxon Valdez spill in Alaska? 25 years later things would look pretty good if Past Ryan would have bought some XOM in 1989 when the Valdez grounded. Macondo is no longer the threat to the long term BP shareholder, its the next crisis that looms. The question isn't if there will be another major oil spill, its inevitable, the question is when? How much will is cost BP? That is the only thing that will likely jeopardize the dividend raises in the future. And I hope Future Ryan picks up more shares when they are cheaper after that disaster.

I plan on being a BP shareholder for life: national support from the prime minister to the Sunday minister, shareholder friendly management with robust earnings and dividend growth, and its a company that makes something the world cannot possibly survive without, energy.

Source: BP Dividends - A Glimpse Into The Future