Is BP's 7% Dividend Attractive?

One opportunity that's been in the crosshairs of many investors is British Petroleum stock. The stock has been trading down about 15% with a yield of 7% ever since the oil rig explosion in the Gulf of Mexico. The company's market cap is also roughly $30 billion lower than it was on April 20, which seems to be an overreaction to the oil spill. Greenpeace USA oceans campaign director John Hocevar noted that "In terms of total quantity of oil released, it seems this will probably fall short of Exxon Valdez ... but the environmental impact will be worse."

An investment in BP may be attractive right now as public opinion on the stock remains relatively negative. With a 7% dividend yield and costs of the oil spill estimated to be less than the $30 billion in market cap lost already, the stock is out of favor but appears undervalued. (Stocks that have fallen out of favor with investors can make for great value plays. for further reading, check out America's Top Dividend-Paying Stocks.)

Source: Investopedia


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