At this point, BP has lost around $100 billion in market capitalization.
Yet even the wildest estimates for the cost of the Gulf of Mexico spill
are far below that amount. The Exxon Valdez spill cost around $9
billion in inflation adjusted dollars. Even if this disaster costs
triple the Valdez, it's still far below the $100 billion that's already
been priced in to BP stock.
Of course, the stock price is one
issue. BP's dividend is another. There should be no doubt that the
reason BP stock has fallen so far is that investors are worried that the
dividend will be affected by the oil spill.
There is reason for
concern. Some are concerned that it's "inappropriate" for BP to be
rewarding shareholders during this disaster. There's even speculation
that President Obama will force BP to suspend its dividend.
BP suspends its dividend, it will almost certainly be acquired by a
stronger company. And since BP pays the biggest dividend of any major
integrated oil company, it's not likely that the dividend will return to
current levels after an acquisition.
More and more investors
are moving their investments into more stable stocks, like pipeline
MLPs, like the one from the Small Cap Investor PRO special report, Dividend
Paying Small Caps for the Energy Boom. It pays a steady 9.5%,
or $1.88 a share.
here for more about this opportunity and others like it.
06-11-2010 1:13 PM