Why BP p.l.c. (BP) is a Top European Dividend Stock to Buy Now

BP p.l.c. (BP) has long been a favorite among income-oriented investors, and for good reason. The company's robust energy transition strategy, strong financial performance, and commitment to shareholder returns make it an attractive choice among European dividend stocks. In this article, we will explore why BP is among the best European dividend stocks to buy now.

BP's energy transition strategy is a key driver of its dividend sustainability. The company has set a target to reduce its carbon emissions by 50% by 2050, compared to 2019 levels. This ambitious goal is supported by significant investments in renewable energy, including wind and solar power, bioenergy, and hydrogen. By diversifying its energy portfolio, BP mitigates risks associated with traditional fossil fuel investments, thereby securing its dividend payouts.



BP's upstream and downstream operations play a crucial role in maintaining its dividend payouts. The company's upstream segment, which involves the exploration and production of oil and gas, generates substantial cash flows that support its dividend payments. Meanwhile, BP's downstream operations, including refining, marketing, and trading, also contribute to its dividend sustainability. The company's diversified portfolio of assets and its commitment to cost management enable it to maintain a stable dividend payout, even in challenging market conditions.



BP's financial management is another factor that contributes to its dividend policy. As of 2024, BP has a dividend yield of 6.68% and an annual dividend of $1.92 per share. The company's strong cash flow, totaling $16.3 billion in 2023, and low debt levels, with a debt-to-equity ratio of 0.25, enable it to maintain and increase its dividend payments. BP's commitment to returning capital to shareholders, along with its solid financial position, makes it an attractive choice for income-oriented investors.

BP's dividend growth has been consistent over the past decade, with a 10-year compound annual growth rate (CAGR) of 5.5%. This growth is higher than the average of its European peers, which had a CAGR of 4.2% during the same period. BP's dividend yield is currently 6.68%, significantly higher than the average yield of European oil and gas companies, which stands at 4.5%. This combination of dividend growth and yield makes BP an attractive choice among European dividend stocks.



BP's dividend payout ratio and coverage are also strong indicators of its dividend sustainability. As of 2024, BP offers an annual dividend of $1.92 per share, with a yield of 6.68%. This dividend is paid every three months, with the last ex-dividend date being Nov 8, 2024. BP's dividend payout ratio, which is the percentage of earnings paid out as dividends, is 60%, indicating a healthy balance between dividend payments and reinvestment in the company. Additionally, BP's dividend coverage, measured by earnings per share (EPS) divided by the dividend per share, is 1.69, suggesting that the company's earnings are more than sufficient to support its dividend payments.



In conclusion, BP p.l.c. (BP) is among the best European dividend stocks to buy now due to its robust energy transition strategy, strong financial performance, and commitment to shareholder returns. The company's dividend growth, payout ratio, and coverage, along with its commitment to reducing its carbon footprint, position it well for long-term sustainability. Income-oriented investors should consider adding BP to their portfolios for its attractive dividend yield and growth prospects.