CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Can BP’s share price weather a dividend cut in its quarterly results?

Investors will be waiting to see if BP cuts its dividend in its upcoming results, as the firm looks back on a tough second quarter and attempts to forecast what the rest of the year might look like.

When is BP’s earnings date?

BP reports earnings for its second quarter (Q2) on 4 August.

BP earnings: what does the City expect?

BP is expected to report revenue of $45 billion, down 38% year-on-year (YoY), while the group is expected to report a pre-tax loss of $11 billion, from a pre-tax profit of $4.7 billion last year.

Big oil firms like BP are not likely to provide much in the way of good news for investors when they unveil their latest set of quarterly earnings. Brent crude prices averaged $29 in the three months to June, from $51 per barrel in Q1. A price war between Saudi Arabia and Russia, and a collapse in demand across the developed world thanks to the imposition of lockdowns to control the spread of Covid-19 lay behind the dive in oil prices.

From being cash machines for investors, the major oil firms now find themselves relying more and more on debt, and this has put pressure on income. As a result, BP, so long a stalwart of an income investor’s portfolio, is now expected to cut its dividend. BP suffered a hit of $14 billion in June, when it dramatically cut its expectations for oil prices and abandoned a host of projects. Crucially, BP’s rival Shell has already cut its payout, giving BP the cover it needs to follow suit.

How to trade BP’s earnings

BP’s Q1 results saw the shares gain 3.3% on the day. The average move on results day is 3.5%, but current options pricing points to a move of 4.2%.

Of the 27 analysts covering BP, 14 have ‘buy’ recommendations, with nine ‘holds’ and four ‘sells’ The median target price is 371p, compared to the current price of around 295p.

BP share price: technical analysis

The BP share price has seen remarkably little movement over the past four months. The bounce to 380p in early June was not followed up with more gains, the price instead dropping back to trade around 315p. The area around 290p has held as support, as it has done since March, preventing any major downward move. However, we have yet to see any indication that the price is likely to move back above 320p and create a more near-term bullish view.

All eyes on BP’s dividend

Will this be the quarter that sees BP cut its dividend? It is certainly possible, but given how widespread the expectation of a cut is, it may not provoke much downside in the shares. A gloomier outlook would however see them test recent support. Meanwhile, a substantially more optimistic forecast for the rest of 2020 and beyond is needed to provide a meaningfully bullish catalyst for fresh upside.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.