BP if only for the Dividend

BP Plc (NYSE:BP) shares closed at $43.85 on Friday which puts their Dividend at a 7.66% return.  We all know oil will not stay at $30 to $40 a barrel and as BP and oil stocks comeback, that dividend will pay off in spades.

Forget betting on Exxon Mobil (NYSE:XOM), their dividend is only paying 2.15% and if you have to pick an evil oil company to invest in, why not BP trading at $43 a share?

Sure BP just came off a horrible quarter and Q1 and even Q2 will be tough but to keep profits and that dividend alive the company is still on track to lay off 5,000 of its 97,000 employees. BP said it intends to keep this year's spending on capital expenditures in line with 2008 levels, likely between $20 billion and $22 billion.  But for those of us sitting on the sidelines looking for a decent security to buy, BP may be a solid play.

Here's what SmartMoney.com has to say about BP:

BP (BP) has managed to raise its dividend in all but one year since 1993, including other times when oil prices were in free fall. BP has other things going for it too: strong cash flow, promising new sources of oil and gas to replace its reserves, and a CEO determined to cut costs. “It’s a good turnaround story over the next couple years,” says JPMorgan analyst Kim Fustier.

With the global economy expected to slow, and demand weakening in developing markets like China, analysts see BP’s earnings falling 43 percent, to $4.64 a share, in 2009. BP makes more money from “upstream” production than rivals like Shell, so it’s more at risk of a shortfall should oil prices tumble further, notes Fustier. But many industry experts think the plunge in crude prices will only lead to shortages later, as oil companies cut back on exploration and global demand heats up again. The long-term trends still favor fossil fuels for the vast bulk of world energy use. And despite low oil prices, BP should make enough cash to support its dividend. Even with oil around $40 a barrel, says Gheit, “there’s no risk to the dividend.”

The recent analyst take also looks good for BP not to mention their current P/E of only 6.56:

The more I think about it, the more I like BP and the thought of investing in them within the next few months, just before the summer driving season.  As the prices at the pump rise, so will BP's stock and if I'm wrong?  That 7.66% dividend gives you some breathing room for your money.

Disclaimer: No positions in BP, not yet anyway.