I reckon the cheap BP share price and sky-high dividend make this FTSE 100 stock a buy

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares See all posts by Harvey Jones I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I reckon the cheap BP share price and sky-high dividend make this FTSE 100 stock a buy “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Harvey Jones has no position in any of the shares mentioned. 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.center_img Simply click below to discover how you can take advantage of this. Harvey Jones | Saturday, 31st October, 2020 | More on: BP I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address The BP (LSE: BP) share price has fallen almost 60% this year, as the pandemic and oil price collapse have savaged the energy sector. This is only the start of the fossil fuel giant’s challenges, as it finds itself playing catch up in the transition to renewables. BP has been a FTSE 100 stalwart since I can remember, and a favourite among income seekers due to its mighty dividend. Nothing lasts forever, though. Is the sharp decline in the BP share price a sign of worse to come, or a buying opportunity?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Investors who had written off BP will have been surprised by this week’s third-quarter update, which showed a reported loss of just $500m, down from a mind-boggling $16.8bn in the previous quarter. Management pinned this on the absence of big write-offs this quarter, and recovering oil and gas prices. The BP share price tempts meUnfortunately, those prices are falling again, with Brent crude down to $37.71 at time of writing, as Europe heads for a second lockdown.While I think BP has the resources to bounce back from this year’s Covid-19 stock market crash, transitioning to zero carbon could prove more challenging. It has to make the shift while protecting its balance sheet and feeding investors the dividends they crave.BP has net debt of just over $40bn, a fraction over its current market cap of $51.7bn (£39.8bn). It will have a job paying that down, while simultaneously funding the investment required to shift into renewables.It is targeting $2.5bn in annual cost savings by the end of 2021, while agreeing disposals for around half its $25bn target by 2025. This includes the agreed $5bn sale of its petrochemicals business.The income is still flowing, though. Q3 operating cash flow of $4.3bn covered its dividend. The BP share price now comes with a forecast yield of 10.9%, which makes it one of the most generous income payers on the FTSE 100. There is even talk of share buybacks restarting from 2022.Still a top FTSE 100 income stockIn the short term, everything depends on the oil price. Which of course depends on the coronavirus. If exploration and production falls in the coming months, and energy surges back once the world gets out of lockdown, the BP share price could rebound nicely. That looks like a big ´if´ right now.The longer-term question is whether it can profit from green energy. BP must work hard to make its old slogan Beyond Petroleum a reality.It is entering the US offshore wind sector, and has agreed to supply Microsoft with renewable energy, but there is a long way to go. BP has an existential fight on its hands, hence its share price troubles. Today’s valuation of 12.61 times earnings is some consolation, as are those dividends, which BP says has “first call on our funds”.Despite the risks, I would still take a punt on the BP share price at today’s price. Image source: Getty Images last_img read more

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