Tuesday 2 April 2013

Portfolio Buy: BP (LSE:BP.)

Cash sitting in a brokerage account does not earn its keep - so there is a continual pressure to re-invest it. Having said that, it is nice to have some cash for any 'special situations' that might pop up.

As readers will know, I am trying to diversify geographically from the UK. Buying into oil - be it BP or Shell is a way invest in dollars without actually buying overpriced dollars, in the sense that the oil is priced in the greenback (as are the dividends). But there is more...

I already hold BP and have been watching it recover from disaster (my latest review was in February 2012).

However The Motley Fool's David O'Hara has made some cogent points about why he thinks the BP share price might be due for a rise, including:
  • the potential resolution of a civil trial in New Orleans (relating to the Gulf of Mexico disaster)
  • the new deal in Russia with state oil company Rosneft
  • the proposed $8bnshares buy back (from the proceeds of its sale of TNK-BP), amounting to around 6% of all BP shares in issue
  • forecast yield of 5.1%

I agree. So I have added to my BP holding - making BP one of my top 3 dividend shares.

[Purchase price: £4.634 per share]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

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