BP isn’t the only FTSE 100 dividend stock that’s crashed to a 52-week low

BP’s backers just can’t catch a break in 2024. But there’s another top-tier dividend stock that’s doing equally poorly. Is our writer tempted by the passive income?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Back in early September, I noticed that FTSE 100 oil juggernaut BP‘s (LSE: BP) shares had slumped to a 52-week low. Sadly for those holding this dividend stock, it’s only got worse since. A new nadir was set yesterday (30 October).

Created with Highcharts 11.4.3Bp P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

However, there’s another top-tier company that’s lagging the market by some margin.

Oil price fall

BP’s woes really kicked in around April of this year. At this point, the oil price began to decline from just over $90 a barrel. Despite a yo-yoing around in the months since, it now sits just above $70.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Q3 numbers, released on 29 October, showed just how much this had harmed the bottom line. Profit of $2.27bn was significantly lower than over the same three-month period in 2023 (albeit beating City expectations).

While the company did its best to raise spirits by initiating another share buyback, it failed to stop the share price rot.

Dividends at risk?

The problem is that the headwinds for BP keep piling up. For example, Chancellor Rachel Reeves has just announced that the windfall tax on those producing oil and gas in the North Sea — aka the Energy Profits Levy — will rise from 35% to 38% on 1 November.

Unless the oil price recovers soon, I wouldn’t be surprised if investors started to fret about a dividend cut.

On the other hand, the shares continue to look very cheap on a price-to-earnings (P/E) ratio of just seven. The current yield of 6.2% might also be worth the risk, especially if new(ish) CEO Murray Auchincloss can guide the company through this sticky patch, reduce debt and get its green energy credentials back in focus. He certainly has his work cut out.

Having previously considered buying the stock a few weeks ago, I’ve returned to feeling neutral about BP. I’ll keep watching for now.

Hot stock no more

B&M European Value Retail SA (LSE: BME) has also had a pretty awful 12 months. As I type, the share price has tumbled 22% since this time last year.

Created with Highcharts 11.4.3B&M European Value PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Such a poor run of form is in sharp contrast to 2023. Back then, shoppers turned to discounters like this in an attempt to make their money stretch as far as possible. Sales duly soared, as did the company’s value.

But B&M has struggled to keep this momentum going as inflation has fallen. Tellingly, analysts at UBS stated in September that the firm’s prices were no longer as competitive with supermarkets Tesco and Sainsbury as they once were.

Cheap income

On the other hand, B&M shares currently change hands on a P/E ratio of 10. Sure, that’s more expensive than BP. But this smacks of comparing apples with oranges. Relative to the market as a whole, it still looks very reasonable. Indeed, me buying now could prove a masterstroke in time if the company is able to continue expanding in France at a fair clip.

At 3.7% based on analyst estimates, the yield isn’t bad either. It’s also more than I’d get from a standard FTSE 100 tracker.

I think I’ll wait to read the next set of numbers before deciding whether I want to bring this stock into my portfolio.

Interim results are due on 14 November.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value, J Sainsbury Plc, and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »