Alongside the oil company’s third-quarter results, analysts reported that chief financial officer Brian Gilvary had said on a conference call that the board was unlikely to raise the dividend this year.
With chief executive Bob Dudley due to leave after February’s full-year results, Gilvary was quoted as saying that a hike before that time would be “premature” and that while the cash returns will be discussed by directors at the year-end it was likely that any increase would have to wait until new CEO arrives.
Investors, many of whom hold shares in the company for a dividend yield that has been well over 5% in recent year, were unimpressed and BP shares fell 4% to 492.55p.
In a brief statement on Wednesday, BP said: “In response to certain commentary following BP's 3Q 2019 results issued on 29 October 2019, BP wishes to confirm that no decision has yet been made with respect to the 4Q 2019 or any future dividend.
“Any decisions with respect to future dividends will be made by the Board of BP PLC following the end of each quarter.”
BP shares were up 1% to 496.9p by Wednesday afternoon.
Credit Suisse said the shares had been penalised the prior day due to "vagueness on the timing" of a potential dividend hike, saying the market had expected this to happen this past quarter.
With BP's balance sheet the weakest among its peers, due to the compensation payments for the Gulf of Mexico oil spill, the analysts said, "this means that whatever surplus BP generates in the near term will likely go first towards deleveraging the balance sheet (as opposed to incremental buybacks beyond its 4Q19 plan), which is the right thing to do, but this also means that even with a DPS hike sometimes in 2020, the total distribution (dividend plus buybacks) in 2020 will likely lag its super major peers in Europe, in our view".