The FTSE 100 is residence to a great deal of wonderful shares paying beneficiant ranges of passive revenue. One which stands out to me is BP (LSE:BP.), with a possible return of 5.3%. That is over twice that of the index and greater than could be earned from a high-interest financial savings account.
It means somebody with £500 to spare may earn £26.50 in dividends. Does this make it a ‘should have’ for revenue buyers? Let’s see.
Money is king
Though dividends are a distribution of revenue, they’re paid in money. And as any accountant will let you know, earnings could be very completely different to precise cash. BP’s a great instance of this.
The oil big has simply reported a alternative value (RC) revenue of $1.1bn for 2025. Its working money circulate (OCF) was $24.5bn.
The huge distinction between these two numbers is defined by actions in working capital affecting money, and the exclusion from RC revenue of the affect of modifications in vitality costs on the group’s inventories. Not surprisingly, the worth of oil has the most important affect on efficiency.
For these with a statistical thoughts, there’s been a 96% correlation (close to excellent) relationship between the benchmark worth of Brent crude oil and BP’s money flows from 2018-2025.
| Yr | Brent crude ($ per barrel) | Web money from working actions ($bn) |
|---|---|---|
| 2018 | 71.34 | 22.9 |
| 2019 | 64.30 | 25.8 |
| 2020 | 41.96 | 12.2 |
| 2021 | 70.86 | 23.6 |
| 2022 | 100.30 | 40.9 |
| 2023 | 82.49 | 32.0 |
| 2024 | 80.52 | 27.3 |
| 2025 | 69.14 | 24.5 |
In 2020, on the peak of the pandemic, BP’s OCF was $12.2bn. To assist protect money, it minimize its dividend by 50%. It is a priceless reminder that nothing ought to be taken as a right in terms of payouts, particularly for a corporation that faces an enormous variety of operational challenges each day.
On the flip
Nevertheless, since 2020, the group’s dividend’s been rising steadily.
For 2025, 32.96 cents (24.2p at present change charges) has been declared. Its last quarterly payout is 79% of what it was earlier than the 2020 minimize. With a present (13 Feburary) yield of 5.3%, it makes BP the eleventh most beneficiant FTSE 100 dividend payer.
For context, the group paid $5.1bn in dividends in 2025. This implies there’s loads of headroom.
And as a reminder of how efficient reinvesting dividends could be, somebody shopping for £500 of shares right this moment may develop this to £1,818 (a 263% return) over 25 years, assuming the group can keep its current yield.
A brand new technique
In a change of strategy, the group’s determined to droop its share buybacks. As an alternative, it’s going to make use of its surplus money to “speed up strengthening” its stability sheet and to reap the benefits of its “distinctive deep hopper of oil and gasoline alternatives”.
Certainly, the group’s been working onerous to cut back its internet debt. It fell by 2% over the course of 2025, nevertheless it’s anticipated to fall extra considerably over the approaching months because the group continues to get rid of a few of its non-core property.
BP’s been struggling for identification currently however the path of journey now seems clear. It’s going to focus extra on its hydrocarbons enterprise. When Meg O’Neill, the group’s new boss, takes over in April, I think she shall be happy that a lot of the heavy lifting has begun. The entire group’s latest actions – enhancing its money circulate in addition to decreasing its prices and borrowings – have, for my part, made BP’s dividend safer than beforehand. That’s why I reckon it’s a superb passive revenue inventory to think about.
