Member Info for zac0_4

Wasn't the value of the share buy back programme carried out in q2 around $500m?

If so, why are people expecting the q3 programme to be in excess of $1bn?

MarkGo. Yes, fingers crossed that the sp moves considerably north from here.

I've invested in dividend paying holdings for many years. There's something psychologically comforting receiving regular dividend payments. The alternative, selling capital, to provide income I've always found more difficult.

However, over recent years I've started to sell units in my funds on a quarterly basis to provide income, just like a dividend.

There's no competition. Investing for growth and taking an income from capital has proven, in my case, to be far more profitable. That's the way I'll go long term and will sell out of all my dividend paying holdings when I'm ready.

Here's some examples of total returns over the last 3 years: Aberdeen 0%, L&G 25%, BP -35%. Fundsmith equity fund 60%.

mojo7865 - I agree. During the last 10 year period BP have returned $74bn to shareholders in the form of dividends and share buybacks. During the same period they reported free cash flow of $17bn. The balance, $57bn, was made up with debt.

Not the most sustainable way to run a business.

I've been invested here for years with an average buy price of £4.45! I'll continue to hold for the time being only on the basis that what's left of my capital is paying around 5% and hopefully there'll be some sustained recovery in the share price. Although my estimate for sp recovery is reducing on a regular basis.

However, I've come to the conclusion that both dividends and share buy-backs are not good use of capital when trying to deliver shareholder returns. Surely if a business produces good returns on capital employed it's far better to deploy a large portion of the profit back into the business to compound those returns.

I've almost come to the conclusion that companies paying a high dividend don't really have the opportunity to deliver sustainable growth, and growing share price, so paying a dividend is a safe bet for them.

If I think about BP the only thing I can say with confidence is that it's primary asset is reducing in volume on a daily basis!

Feel free to pull that argument to pieces!!!!

Share-be-alright: The post from Android 101 does contain the relevant statement from the Q1 results. This is where I took the comment regarding a cash flow deficit in Q2 from.

I would question the following from Android 101's post - "I think BP did guide a deficit in Q2 based on $45 oil" For me this is factually incorrect. The average crude oil spot price (Brent/WTI/Dubai) at the end of each month in q1 was Jan $54, Feb $60 and Mar $64. The statement regarding a cash flow deficit will have been made on BP's forecast of oil price in Q2, which will have been far higher than $45 pb.

They are actually forecasting a cash flow deficit in q2.

. . . but I've finally come to the conclusion that investing for income ie dividends is an absolute nonsense!

I've held both dividend paying shares and global equity funds for many, many years. There's always been a certain feeling of comfort receiving a dividend payment on a regular basis and it's always felt to be the right thing to do. But at what cost?

Here's 3 of my dividend paying holdings, and their total return, ie capital growth and dividends received, over the last 3 year period - Standard Life Aberdeen -2%, Merchants Trust +18% and (good old!) BP -36%.

Compare that to an international index tracker fund (L&G) +46% or my largest holding Fundsmith +62%.

I'm down to 7 dividend paying holdings at the moment and I fully intend to migrate away from them over the coming years. Investing for income is a poor use of my capital.

Murray Auchincloss made the statement.

So you honestly expect a dividend increase this quarter even though they forecast a cash flow deficit in q2?

His average oil price assumption is also based over a long-term horizon. He'll not change direction based on a spike in oil price now.

As for being clear as to what he intends to do with excess cash generated, then I don't think he could be any clearer . . . "a minimum of 60% of excess cash to be returned to shareholders via share buy backs"

What do you want from him? A personal letter!

Devtrad - as you're new to this here's some advice. By all means play around with individual shares but also do the following:

Invest, by direct debit, every month in a global equity fund. Every month without fail. Year after year after year. Never sell. Never panic. Just invest. You'll be very pleasantly surprised at the result over the long term!

If BP is a cash machine when will that be reflected in the share price?

I'm in a similar situation. Average purchase price of £4.45. So currently sitting on 31% capital loss.

I won't put more into this as I would consider that to be throwing good money after bad!

2020 for me was the ultimate stress test for my 22 investments (mainly funds and trusts). BP is in the bottom 2 along with Shell.

I'll continue to hold but when the time is right I'll be saying goodbye to oil shares once and for all!

Here we go again with regards to an increase in the dividend. There will be no increase in the dividend . . . not because I say so because BP say so!

I've thought similar for a while now. I've begun to think the share has been re-rated and the level it now sits at is the new norm. The days of 450p to 550p are long gone I fear.

"A bargain if I ever saw one" Or maybe the market has re-rated BP and around this level is the new norm!

"I know what to avoid these days" . . . Bbb - After 25+ years I'm getting better at that (I think!). One thing I do know is that once I exit from here I'll be adding oil stocks to my list of 'things to avoid' over the long term!

Bigbadbaz - I disagree. After 30 years of investing you'll be far wiser today than you were when you set out!

BP share price is at 312p for a reason. What that reason is I've no idea. I'm beginning to suspect oil stocks are being related based on future sentiment towards fossil fuels and the likely negative knock on effect on earnings long term.

The days of 500p per share seem light years away!

Charlesrixon - what are you after? Potential recovery stocks, stocks to deliver long term sustainable growth or healthy dividend payers?