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The BP (LSE: BP) share price has had a strong run. It’s up around 20% over the last year and 70% over five. Add roughly 5% a year in dividends and the total five-year return is approaching 100%. Not bad for a stock that’s been through an extraordinary amount of turbulence.
During the pandemic (2020), BP shares crashed with the oil price. In 2022, the Ukraine war sent oil and gas prices soaring and BP stock duly followed. Then energy prices fell. So did BP.
A volatile FTSE 100 stock
The FTSE 100 oil giant had other issues. BP spent years trying to reinvent itself as a greener energy company, only to retreat under pressure from activist investors and frustrated shareholders. The company has endured a string of boardroom changes and has also been hit by punitive windfall taxes on its UK operations.
There’s been good news too. BP made a major hydrocarbon discovery at Bumerangue offshore Brazil, its largest discovery in 25 years. Then came the Iran war.
Brent crude jumped to around $118 a barrel at the end of April as the conflict disrupted supplies. It’s now retreated to $88, but that still up 47% on $60 at the start of the year. Where it goes next depends on the Middle East, and I’m not making predictions.
Consensus stock predictions
So what do the experts reckon? The 27 analysts offering one-year share price forecasts produce a consensus target of 600p. If correct, that would see BP shares climb around 16% from today’s 515p. Add the forward dividend yield of roughly 4.9% and we’re looking at a potential total return above 20%. Pretty decent, if you ask me.
The forecasts are wide-ranging though, from 454p to 770p. That last one is a rise of 50%. So could BP really hit 770p? As far as I’m concerned, it could go anywhere.
Of the 30 analysts giving stock ratings in the past three months, most are positive:
- Strong Buy: 12
- Buy: 2
- Hold: 13
- Sell: 1
- Strong Sell: 2
That’s encouraging, but the 13 Holds are a useful warning. From here, anything could happen. There could be peace in Iran, which would presumably sink oil. Or the war might spread, sending crude to the stars. I just don’t think you can select BP by second-guessing the oil price. Too many variables.
Reasons to buy this one
I think BP shares are worth considering today, but more as portfolio diversification. Even during the green transition, the world still needs oil and gas, and BP has rewarded shareholders lately.
Things could improve further if new CEO Meg O’Neill gets a grip on the business. She’s already moved quickly to restructure BP and sharpen its focus. After the summer we’ve had, some investors won’t want to touch fossil-fuel giants at all. I respect that.
For everybody else, BP’s worth considering as an investment. Just accept that this one is going to be volatile. If you’re in two minds, I can see other great FTSE 100 dividend growth stocks to consider today…
Should you invest £5,000 in Bp P.l.c. right now?
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Harvey Jones owns shares in BP.
This story originally appeared on Motley Fool
