The BP share price: a once-in-a-decade chance to get richer?

I’ve done a lot of fretting about BP‘s (LSE: BP) share price of late. I worried before adding it to my Self-Invested Personal Pension (SIPP) in September 2024, and I’ve worried ever since. I only calm down when the dividends land. They’re paid quarterly, five have arrived already, and the next is due on 27 March. I find that steady income soothing. So why all the worry?

Troubled FTSE 100 energy stock

BP’s endured a grim 15 years since the Deepwater Horizon disaster. Strategy drift followed. The group flirted with renewables, retreated after painful losses, then fled to the familiarity of fossil fuels. Two chief executives exited under clouds, leaving the business searching for consistency and direction.

That challenge has been made tougher by the falling oil price. Brent slid towards $60 a barrel earlier this year and there’s little BP can do about that.

The world’s changing too. Economies are becoming less reliant on oil, with global energy intensity down sharply since 1990 and renewables moving into the mainstream. Only a few years ago, analysts were warning of peak oil, where reserves got too difficult and expensive to access. Now they suspect demand may peak first.

Trying to predict oil prices is a losing game, and recent weeks show why. Brent’s climbed back towards $70 for the first time since last summer. A potential US strike on Iran, Chinese stockpiling, fading fears of oversupply, price pressure on US shale producers and a cold winter lifting gas prices have all played a part.

BP shares have duly jumped 6% in the past week, but let’s not get too excited. They’re up just 11% over 12 months and down 5% across three years. But don’t read too much into that, as it follows the spike triggered by Russia’s invasion of Ukraine in 2022. Some retrenchment was inevitable.

Blue-chip income hero

Given all my fears, what on earth persuaded me to buy BP in the first place? First, portfolio diversification. BP and Shell are still big FTSE 100 players, and I wanted exposure to one of them. Also, energy stocks are cyclical, and with BP down in the dumps I thought it was a good time to take a long-term position. The board was in a mess, activist investors were getting fratchy, and I decided that at some point management would have to take drastic action. I chose to buy before it did. I’m still waiting.

Today, BP shares trade at similar levels to 2016 and 2017, which is pretty much a full decade ago. I think this is a tempting opportunity to consider, especially for dividend seekers. Plus there are share buybacks on offer too, currently running at $750m a quarter, which should support the stock.

Renewables and climate change remain huge and unknowable risks, so investors must take a view on that. But I’m going to stop worrying for now and love my BP dividends, while crossing my fingers for a bit of share price growth too.

The post The BP share price: a once-in-a-decade chance to get richer? appeared first on The Motley Fool UK.

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Harvey Jones has positions in Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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