BP Dividend Cut May Come Monday - TheStreet

BP Dividend Cut May Come Monday

BP may announce the suspension of its dividend on Monday, according to reports.
Publish date:



) -- The uncertainty about the amount of oil flowing from the


(BP) - Get Report

oil spill cleared up a little on Friday, but uncertainty over a possible BP dividend cut continues to be a major market story.

Comments from BP CEO Tony Hayward to the

Wall Street Journal

Friday and a flood of anonymous leaks to the British press seem to suggest that BP is preparing shareholders for a suspension of its dividend as early as Monday.

The anonymous comments from BP sources seemed aimed at softening the blow, since they also floated the idea that BP planned to create an IOU for investors. Once BP is no longer bound by payments from the oil spill -- or at least no longer bound by the anti-BP dividend political rhetoric -- shareholders will reportedly receive their promised payout.


Times of London

got the dividend talk going in its Friday edition, with anonymous comments about the dividend IOU plan.

Then, on Friday afternoon, the


made the most definitive statement on the BP dividend issue, saying that company's board would meet on Monday to approve the suspension of the dividend. But the company won't likely announce the decision, the BBC reported, citing anonymous sources, until after the highly anticipated meeting between BP top brass and President Obama on Wednesday.

The only official words from BP about the dividend came from Hayward's comments to the


, but his words were vague. The CEO allowed only that BP was exploring all its options regarding the dividend.

The political heat over BP's proposed shareholder dividend continued as the week drew to a close, with the White House saying it had no plans to block the payout, even though it would keep the pressure on. In fact, the White House may have no legal means of blocking the payout.

On Capitol Hill, the message on dividends was slightly different, with House Speaker Nancy Pelosi (D-Calif.) saying small business claims in the Gulf coast region should come before the dividend, and Representative Ed Markey (D-Mass.), a primary Capitol Hill thorn in the side of BP, indicating the government would block the BP dividend, if necessary.

On Thursday, in a less guarded statement than that offered by Hayward, Oppenheimer & Co. analyst Fadel Gheit, not one to mince words, said in a research note that the federal government's attacks on the BP dividend were ill-advised, not to mention unenforceable.

But, others say, the federal government need only apply pressure on BP until the company can't help but suspend the dividend as a way to squelch the outrage within the court of public opinion.

British business interests came out swinging on Thursday, pleading with Prime Minister David Cameron to call President Obama and insist that the administration scale back the anti-BP rhetoric. Nevertheless, the U.S. government has little to lose by keeping the non-legal pressure on BP to suspend the dividend.

The linking of the hefty BP dividend to the massive economic damage in the Gulf Coast region -- Obama referred to it as the "nickel and diming" of Gulf residents -- has helped force the petroleum giant into speeding up its payment of damage claims to Gulf residents and businesses.

In the U.K., many big mutual funds depend on BP for a large portion of their dividend income streams paid out to shareholders.

The BP dividend is the largest income generator among the stocks in the FTSE 100 Index.

The BP dividend for shareholders of record in the second quarter is theoretically set to pay out roughly $2.5 billion on July 27.

-- Reported by Eric Rosenbaum in New York.


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