Member Info for zac0_4

Gavster-NBC - yes, I think I did expect a drop in tech stocks yesterday. Negative news normally produces an instant market reaction.

So we should see pre pandemic volumes reached by end of H1 2022. I'm prepared to sit tight for another 12 months. Hopefully we'll have a clear indication by then as to the value the market allocates to BP.

I think somebody mentioned in a previous post how the "tax avoidance" treaty announced over the weekend would have a major negative affect on tech stock valuations. Nothing to date . . . the Nasdaq finished the day +0.49%!

Neversellshell22 - "I guess the question is how much oil and gas are we producing per day...." It is. And also I am keen to see some trading figures, revenue and profit, that resemble 2019 levels. For me that will be the acid test with regards to the future share price level.

I'm beginning to fear oil and gas companies have been re-rated by the market!

"BP is doing well" - that statement is very dependent on when you actually bought the share!

SD235 - Legal & General is one of the very few individual shares I still hold. First bought back in October 2015. My average cost price is £2.39, so not particularly low. However, it highlights to me the importance of 2 key factors, (i) protecting capital, and (ii) a reliable, growing dividend. My capital's up about 17% and, to date, I've received dividends to the equivalent of 34% of my investment. So, a 51% total return. As part of my portfolio, which consists of 23 holdings, I'm more than happy with it so far.

Unfortunately, for me, NRR didn't meet the 2 factors above so I eventually sold. Too late, I might add!

adv11 - I was a long term holder here. Each year I enjoyed the dividends at the expense of even greater capital erosion! Finally sold the last of my holding at around 80p on the way down at a significant loss. Moved cash into Merchants Trust IT. Quarterly dividend payer and has increased dividend annually for 39 years. I was lucky enough to purchase at the right time and have seen capital growth of 38% and now enjoy a 7.1% annual yield on my purchase price. I might add that the gain doesn't come close to my losses suffered here.

One of my best long term holdings is Fundsmith Equity Fund. I invest directly with Fundsmith in the accumulation version of the fund. They offer a regular automatic withdrawal facility. So, I've set up a quarterly withdrawal with them and it's just like receiving a quarterly dividend. To date my capital has grown by 36% and I've been paid withdrawals to the equivalent of 9.5% of my initial investment. It's not a recommendation just food for thought.

Money is hard to come by and so easy to lose. I feel fairly comfortable with both of the above holdings. I also hold Henderson Far East IT and Henderson High Income IT. Sold HDIV a number of years ago when they cut the dividend.

Good luck!

Not everyone agrees with green transition targets!

https://www.hellenicshippingnews.com/saudi-oil-minister-calls-ieas-net-zero-roadmap-la-la-land-sequel/

". . . but refuses to acknowledge material evidence"

The only person refusing to acknowledge material evidence is you!

If people want to filter me fine. But all I've posted is what BP have laid out as their mid-term dividend and share buy back policy. But of course you know better . . . !!!!!!

I've checked some FTSE100 companies as you suggested. How about the following - Diageo, London Stock Exchange Group, Astra Zeneca, Reckitt Benkiser, RELX, CRH, Experian, Ashstead Group, Scottish Mortgage, Standard Chartered, Smith & Nephew? All with yields below 2.5%. And there are plenty more. I guess they all must be struggling to a attract investors based on your logic?

Let's look at BP dividend and share price before Covid. At the end of May 2016 the sp was 360p. At the beginning of October 2018 it hit 600p. That's a 67% growth in the share price. Did the dividend grow accordingly during this period?

As I say, in my opinion, there is no link between share price and dividend payments and I'm happy with my conclusion. I guess we'll have to agree to differ. Good Luck with your investments.

The dividend payment is set by the board of directors and is dependent upon business performance. It has nothing to do with the share price. The board have set a strategy which I expect them to stick to. Here's statements around dividends and cash returns to shareholders for the period 2021 - 2025:

5.25c per share per quarter intended to remain fixed at this level
Share buybacks from at least 60% of surplus cash flow
Total returns per quarter of around 10.00c per share per quarter

The above is based on a brent price of 55$ per barrel. If oil price remains higher than their forecast then maybe (maybe!) we might see a small increase in dividend at some point. But it will have absolutely nothing to do with the share price!

The report was issued around March time. Here we are 2 months later and you say the basis for the plan has changed. Well if that's the case the bod really don't know what they're doing!

"The issue isn’t the debt. It’s return on invested debt is all that matters. If BP borrow at 3% and are returning 10%, the more debt the better . . ."

In theory, yes. In practice the nett returns delivered over the last 5 years (possibly more) are way below double figures. -11.5%, 1.5%, 3.2%, 1.4% and 0.1%.

For those of you who believe the dividend is the main driver of the share price here then you're in for a long wait! According to the 2020 annual report the intention is to hold the dividend at the current level until 2025.

Gavster-NBC - I'm afraid we're going to have to agree to disagree. Earnings drive company value not how much dividend they pay. GL.

Oh, and don't forget the annual GoM spill payment will be paid in q2. I think it's around $1.2bn.

So if BP increase the dividend the share price will go up? Is that what you're saying?

The market prices a share based on future projected earning not on how much dividend it pays!

$4.8bn of divestments in q1 are unlikely to be repeated. How will this affect q2 profit calculations?

BP pay dividends from free cash flow. Over the last 10 years they've achieved total fcf of around 17bn$. During that same period they've paid out to shareholders, either via dividends or share buy backs, in the region of 74bn$. The difference between the 2 figures has been met by increasing their debt levels.

Where as other companies reduced dividends in the short term to protect their balance sheet and will/have reinstated the dividend as things improve, I don't think BP are on that path.

Reducing debt, yes, investing in renewables, yes, significant increases to the dividend, no. I can't see any meaningful increase to the current 14.7p dividend any time soon that will get it anywhere near its pre-pandemic monetary value.

licker - was your response to my post?