The Lemon Fool

Here; viewtopic.php?p=401952#p401952

I guess most of us, including me, have BP. in our HYPs, so this should be of interest hereabouts.

The item includes this bit;

On reaching this net debt target, bp is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks, subject to maintaining a strong investment grade credit rating.

Further information, including in relation to share buybacks, will be provided with bp's first quarter 2021 results, expected to be reported on Tuesday 27 April.

I'd rather they paid me more dividends tbh.

Ian.

idpickering wrote:
I'd rather they paid me more dividends tbh.

Ian.

Agreed Ian. I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future. But that future never seems to arrive. Nothing beats the honesty of cash in the pocket, at least for those of us who follow a HYP strategy.

BBLSP1 wrote:

idpickering wrote:
I'd rather they paid me more dividends tbh.

Ian.

Agreed Ian. I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future. But that future never seems to arrive. Nothing beats the honesty of cash in the pocket, at least for those of us who follow a HYP strategy.

If you think BP shares are cheap then its a sensible time for BP to buy them back and is probably a better use than paying us increased dividends. My problem with share buybacks is that companies never seem to do them just when their shares are cheap. Some even seem to only buy them back only when overpriced.

At the moment I have no problem with BP making some of their shareholder returns via buybacks as their shares are not expensive (I was topping up at the end of last year though at a some what cheaper price than is available now (230 and 190p).

daveh wrote:

BBLSP1 wrote:

idpickering wrote:
I'd rather they paid me more dividends tbh.

Ian.

Agreed Ian. I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future. But that future never seems to arrive. Nothing beats the honesty of cash in the pocket, at least for those of us who follow a HYP strategy.

If you think BP shares are cheap then its a sensible time for BP to buy them back and is probably a better use than paying us increased dividends. My problem with share buybacks is that companies never seem to do them just when their shares are cheap. Some even seem to only buy them back only when overpriced.

At the moment I have no problem with BP making some of their shareholder returns via buybacks as their shares are not expensive (I was topping up at the end of last year though at a some what cheaper price than is available now (230 and 190p).

My thanks to you both for your input. As I mentioned here before, I topped up both my oil shares, BP. and Shell RDSB, four times last year. I'm at my maximum spend on both, so am not looking at topping up either any time soon.

Ian.

daveh wrote:

BBLSP1 wrote:

idpickering wrote:
I'd rather they paid me more dividends tbh.

Ian.

Agreed Ian. I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future. But that future never seems to arrive. Nothing beats the honesty of cash in the pocket, at least for those of us who follow a HYP strategy.

If you think BP shares are cheap then its a sensible time for BP to buy them back and is probably a better use than paying us increased dividends. My problem with share buybacks is that companies never seem to do them just when their shares are cheap. Some even seem to only buy them back only when overpriced.

At the moment I have no problem with BP making some of their shareholder returns via buybacks as their shares are not expensive (I was topping up at the end of last year though at a some what cheaper price than is available now (230 and 190p).

It might be a sensible time to buy, but my feeling is that I would like that decision to be mine, and not made for me by the company. Looked at that way, you could say the company is being a "nanny" or perhaps "controlling" rather than letting me make my own investment calls.

Arb.

Arborbridge wrote:[It might be a sensible time to buy, but my feeling is that I would like that decision to be mine, and not made for me by the company.

That is exactly the way I feel about share buybacks too. The company has no idea about the diversity of my portfolio, which I am trying to keep in balance. C.

daveh wrote:

BBLSP1 wrote:

idpickering wrote:
I'd rather they paid me more dividends tbh.

Ian.

Agreed Ian. I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future. But that future never seems to arrive. Nothing beats the honesty of cash in the pocket, at least for those of us who follow a HYP strategy.

If you think BP shares are cheap then its a sensible time for BP to buy them back and is probably a better use than paying us increased dividends. My problem with share buybacks is that companies never seem to do them just when their shares are cheap. Some even seem to only buy them back only when overpriced.

This is exactly what they are supposed to do (and were authorised to do by the shareholders). If you think the shares are overpriced, sell them to the company or in the secondary market. It's really that simple.

I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future.

It's not an argument, it's a mathematical certainty.

GS

GoSeigen wrote:It's not an argument, it's a mathematical certainty.

But not quite as certain as the money being deposited into your account. C.

GoSeigen wrote:

BBLSP1 wrote:I’ve seen all the arguments that less shares means that the dividend distribution per remaining share will be greater in the future.

It's not an argument, it's a mathematical certainty.

No, a company having fewer shares as a result of buybacks does not make greater future dividends per share a mathematical certainty. In particular, if it happens that the company never again has cash available for distribution and eventually goes bust, £0 divided among fewer shares produces the same future dividends per share as if it had been divided between the original number of shares, not greater dividends per share.

Of course, ensuring as far as possible that that doesn't happen is an important aim in HYP share selection, and a HYPer might reasonably feel that it's a practical certainty for their HYP at any particular moment in time - but it's not a mathematical certainty.

Gengulphus