BP: Attractive Investment Setup

Summary

• BP shares are undervalued, presenting an attractive risk profile, especially for dividend investors.
• The energy firm remained, despite a Q/Q drop in liquid price realizations, highly profitable.
• BP’s stock buybacks are a key reason for my bullish view of the company. Buybacks especially make sense when the share price has declined, which is the case for BP.
• BP offers a 6% dividend yield with a below 50% non-GAAP TTM dividend payout ratio, indicating room for future dividend growth.
• Risks include potential declines in petroleum prices and possible reductions in stock buybacks, which could impact BP’s profitability and share price support.

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Shares of BP (NYSE:BP) have become unreasonably cheap in the last several weeks which creates an opportunity, especially for dividend investors. BP announced that it repurchased $1.75B worth of its shares in the fourth quarter which is something that makes a

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BP, XOM, CVX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.