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7 ETFs for Investors Mourning the Death of BP's Dividend

Published Fri, 18 Jun 2010 18:22:41 GMT on The Motley Fool

Almost two months after an offshore explosion sparked one of the worst environmental disasters in U.S. history, the White House has stepped in to ensure that British oil giant BP (NYSE: BP) is held accountable for cleanup efforts and the economic damage done (see Five ETFs To Watch Ahead of Obama's Oval Office Speech). With public outrage toward the oil industry reaching new highs, BP has had little leverage to resist the measures proposed by lawmakers; BP hastily agreed to set up a $20 billion escrow fund to pay claims and suspend at least three dividends. The company hopes to resume its dividend payments in 2011, but it remains to be seen if that will be a politically or financially viable option.
The suspension of the dividend was a victory for the Obama administration and was cheered by environmentalists who feared that BP would prioritize payments to shareholders over claims to those affected by the spill. But for pension funds and other investors who had come to rely on a dividend yield as high as 5% in recent years, the development was devastating. "Clearly, income investors are out in the cold; one of their safest bets has come spectacularly unstuck," writes David Cottle. "So, for fund managers and all, the race will be on to make up any shortfall the loss of BP's dividend represents before the next dividend distribution period."... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BP 37.67   14.3 2.64 2.44 6.45
ROYAL DUTCH SHELL A 68.62   27.1 2.59 3.76 5.35
GLAXOSMITHKLINE 41.03   18.4 2.23 1.83 4.47