2024-05-12 18:00:00 ET
Summary
- BP stock offers a high dividend yield of close to 5% and a low forward P/E ratio of 8.58x.
- The company's dividend is safe with low payout ratios and there is room for dividend increases in the future.
- The value proposition is further enhanced by its aggressive share buyback program, especially under current P/E.
- While EPS growth may face some headwinds in the near term, I expect a solid rebounding in the coming 1~2 years.
BP stock's high yield and low P/E
BP 's (NYSE: BP ) stock price has largely been moving sideways recently. As seen in the chart below, its price increased only about 3% in the last year, while the S&P 500 enjoyed one of the best years with more than 20% gain. There are certainly good reasons for such lag, and I will touch on several of them later. Despite some profit headwinds, BP has been improving its finances. As such, the goal of this article is to argue that the combination of price stagnation and improvement in its financials has created a sizable value-price gap and a highly asymmetric return/risk profile....
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BP Stock: 9x P/E, 5% Yield, Plus Buybacks - Don't Overthink It