Suspending BP Dividend Dumb Idea

Demanding that BP suspend its dividend is an idea completely without merit. The dividend has nothing to do with BP’s ability to clean up from the disaster or pay damages. Even in a worst-case scenario, BP now has the ability to pay all claims.

Dividends go to shareholders, who include just about anyone who has a pension or owns mutual funds. Dividends are a share of earnings to which all shareholders are entitled.

BP’s management is responsible for the disaster. Although executives own stock, the vast majority of shares are held by people who had nothing to do with this mess.

The only way BP can run out of money is if politicians continue trying to destroy the company. The stock is now going lower than fundamentals would suggest, lopping off billions in capitalization. Investors now recognize that BP faces the danger of dismemberment by politicians

BP pays a fat dividend. That’s why people buy the stock. We need a healthy BP to pay its obligations.

BP’s focus should now be on stopping the gusher. Instead it is distracted by opportunistic politicians who don’t know what they are talking about.


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