BP update - further conformation that bricks and mortar are the way forward

21/06/2010

The news that BP has suspended it’s dividend payments has not come as a surprise; the length of the suspension for the rest of this year, is however unexpected.

BP’s share price continues to plummet - it did rise slightly this afternoon when the news of the fund established to help those effected by the oil spillage was announced but it has since dropped again as further details emerge.

According to BBC News Online Tonight, the impact on BP's share price has two main drivers.

'Firstly, concerns over the eventual cost of the spill, which is far from clear. The amount is rising by the day and no-one knows how big or how long the clean-up operation itself will be. Even harder to quantify is the eventual bill for compensation to businesses and workers affected by the spill and fines that the US government has said BP will have to pay.

Secondly, there are fears that the company could cut its dividend (the quarterly payment it makes to shareholders). It is under intense pressure in the US not to pay the next one until the full extent of the spill is known.'

The news is not good for the pension funds as they lose £1 in every £7 they are paid. The next dividend payment from BP was due as soon as this Monday. The situation remains volatile and once again, proves that bricks and mortar remain a safe and solid investment.