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URLhttps://seekingalpha.com/article/4820246-bp-it-was-too-low-last-year-still-too-low
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Meta TitleBP: It Was Too Low Last Year, And It's Still Too Low (NYSE:BP) | Seeking Alpha
Meta DescriptionBP remains undervalued, trading at just 13 times 2025 earnings, with a 5.7% dividend yield, offering a compelling value proposition. Find out why BP is a Buy.
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PM Images/DigitalVision via Getty Images BP p.l.c. ( BP ) has been a horrible investment over the past decade compared to simply investing in an S&P 500 index fund. Over the past decade, just allocating capital toward the SPDR S&P 500 ETF ( SPY ) would have generated a 229.94% return, while shares of BP are up 10.66% before the dividends are accounted for. BP has been ridden with the consequences of Deepwater Horizon since 2010, when one of their rigs created the largest marine oil spill in history and an identity problem as BP tried to figure out what type of energy company it would be. Regardless of what has happened in the past, shares of BP were too low last year, and their still too low now. The reality is that BP is an $88.65 billion company that is generating $8.59 billion in free cash flow ( FCF ) and trades at 13.16 times 2025 earnings while paying a dividend of $1.94, which is a 5.65% yield. There is a lot of value left to be unlocked, especially with how the EIA is projecting how the production and consumption of energy are expected to expand going forward. As the hyperscalers deploy hundreds of billions on CapEx for their advancements in A.I. through additional data centers annually, the amount of energy used will continue to expand, which is bullish for BP. I think that investors are getting a tremendous value play with shares of BP, as there is forward EPS growth on the horizon and its shares seem to be undervalued while paying a dividend yield that exceeds the risk-free rate of return. Seeking Alpha Following up on my article on BP When shares of BP fell below $30, causing the dividend yield to approach 7%, I said that this was an incredible deal. My last article was written on May 2 nd ( can be read here ), and since then shares of BP have climbed 21.35%, while the S&P 500 has increased by 14.80%. When the dividends are accounted for, BP’s total return was 25.12%. I had felt that BP’s strategic pivot back to traditional energy sources was the right move and provided investors with a compelling long-term opportunity. After going through the numbers, it looked as if BP’s strategic focus on upstream business, cost reduction, and asset divestitures could boost FCF and shareholder value in the future. At the time investors were able to lock in a yield at close to 7%, and while that opportunity is in the past, I still believe there is a lot of upside going forward. I am following up with a new article to discuss why I believe BP offers a compelling value proposition for investors at a time when the demand for energy continues to increase. Seeking Alpha Risks to investing in BP While I am bullish on BP, there are significant risk factors for investors to consider, and everyone should do their due diligence. The growth in CapEx allocations could slow down, and the data center expansion that has been fueling additional energy utilization could decline. If this happens, BP may not be in a position to drill as much oil as they had originally projected. We could also see OPEC+ increase oil production, causing the price per barrel to decrease, causing a disruption to BP’s top and bottom lines. With the advancements in technology, BP could find themselves in a position where breakthroughs in technology cause larger amounts of efficiencies throughout products that require electricity. Advancements in technology could also cause breakthroughs in energy production, lowering the price per kilowatt hour and making oil and gas less appealing. BP has also been a horrible investment compared to investing in the S&P 500. BP delivered strong Q2 results and showcased why it's still creating value for shareholders BP delivered a strong operational performance in Q2 as their upstream plant reliability and refining availability exceeded 96%. BP’s upstream advancements helped set the stage for future growth as 5 of their 10 major project start-ups planned through 2027 were delivered. BP brought online the first oil at the Argos Southwest extension in the Gulf of America and its first gas at Mento in Trinidad, while the Azule joint venture's start-up of the Agogo Integrated West Hub Project in Angola came online. BPX Energy in the US Permian Basin launched Crossroads to support production growth. BP also made 4 final investment decisions (FIDs) which included the Shah Deniz Compression project in Azerbaijan and the Atlantis Major Facility Expansion in the Gulf of America. BP’s exploration efforts generated 10 discoveries YTD, with the Bumerangue block discovery in Brazil revealing an estimated 500-meter gross hydrocarbon column in a high-quality pre-salt carbonate reservoir. BP is also focusing on its downstream and transition segments, as Castrol's earnings were up over 20% in the first half of 2025. BP was able to lean on its investments in technology and A.I. to enhance its operational efficiency as they recognized a 90% reduction in well planning time in Azerbaijan, a 5% increase in production through digital tools, and a 50% increase in marketing material production. BP is continuing to utilize its ERP system with the goal of implementing a unified data platform to drive further cost efficiencies and leverage AI across the company. BP produced an underlying replacement cost profit in Q2 of $2.4 billion, which was an increase from $1.4 billion in Q1. This was driven by a surge in average gas marketing and trading, which recognized stronger realized refining margins and improved customer business performance. BP’s operating cash flow came in at $6.2 billion in Q2, which included a $1.4 billion working capital build. BP’s net debt decreased by $1 billion to $26.0 billion, which indicated that cash inflows from higher operating cash flow and divestment proceeds surpassed cash outflows. BP allocated $2.4 billion toward CapEx in Q2, which brought their annualized CapEx allocation to $7 billion in the first half of 2025, which is in line with their target of around $14.5 billion for the year. BP was able to increase the dividend by 4% while they increased their share buyback program by $750 million in Q3. BP has achieved roughly $1.7 billion in savings since the beginning of 2024 as they work toward their $4-5 billion target by the end of 2027. As BP streamlines its business processes and develops new projects, their margins could improve while operational cash flow increases over time. As the demand for energy grows, their CapEx investments could play a critical role in unlocking future value, as BP has a portfolio of assets that’s hard to match. BP BP is strategically positioned for future growth as it continues to execute on its 12-quarter plan, which focuses on increasing shareholder value. BP’s goal is to achieve a CAGR of over 20% in adjusted free cash flow through 2027, get to a net debt target of $14-18 billion by the end of 2027, and reduce costs by $4-$5 billion over this period. BP is actively reshaping its portfolio by progressing the strategic review of Castrol and divesting non-core assets such as its Netherlands mobility business and US onshore wind assets. BP continues to reduce the number of ERP systems as they lean toward harnessing the power of A.I. from their software platforms as their digital tools are optimizing production at offshore oil and gas facilities. BP has been able to increase production by around 5% and protect over 10% more from going offline through their enhanced capabilities. BP is leading toward generative A.I. to reduce well planning time by 90% in Azerbaijan as its learnings from upstream digitization are being applied to the refining business to remove costs and optimize operations. These technological advancements are not only driving cost reductions but also improving capital productivity across the portfolio, which should lead to margin expansion and larger profitability in the future from a portfolio that has a lower leverage ratio. The demand for energy is expected to expand and BP looks like a value play that can generate capital appreciation and large dividends for shareholders When I look at Amazon ( AMZN ), Meta Platforms ( META ), Microsoft ( MSFT ), and Alphabet ( GOOGL ), they are continuing to increase their allocations toward CapEx, which is being predominantly spent on expanding their data centers. In Q2 these 4 companies allocated $88.25 billion toward CapEx, which was a 66.97% increase YoY compared to the $52.85 billion they spent in Q2 2024. Over the past year these companies have spent $291.35 billion on CapEx, and they have all committed to allocating more in the future. The EIA is expecting that the global consumption and production of liquid fuels through the end of 2026 will continue to increase. As the largest companies expand their data center footprints, more electricity will be needed, and we could see the long-term effects change the dynamics of how the long-term energy outlooks look. BP is in a prime position to benefit from the changing narrative around oil and gas while the demand for energy continues to increase. EIA Steven Fiorillo, Seeking Alpha BP is trading like a tobacco company, yet its products are a necessity for the global economy to function. Today, shares of BP are trading at 13 times 2025 earnings, and it is expected to grow its EPS by 24.9% over the next two years, making it trade at 10.41 times 2027 earnings. Altria Group ( MO ) trades at 12.23 times 2025 earnings and is expected to grow its EPS by 6.62% over the next two years. MO trades at 11.47 times 2027 earnings compared to BP, which trades at 10.41 times with a fraction of the EPS growth. Shares of BP have been discounted for far too long, as this company is a cash cow with tailwinds from expanded energy demands in the future. I don’t think that oil and gas will continue to trade at these types of valuations in the future, especially with the amount of growth the market is expecting. Steven Fiorillo, Seeking Alpha Over the past decade, BP has generated $19.80 in dividend income , which is 63.87% of its share price from 9/6/15. BP has had an average annual yield of 6.39% despite reducing the dividend during 2020. Currently investors are getting a $1.94 dividend, which is a 5.72% yield in an environment where the Fed is expected to start cutting rates. BP’s dividend will look exceptionally strong as risk-free assets start to decline. BP has been committed to returning capital back to shareholders through buybacks and the dividend, which was just increased by 4%. As capital flows back into the market because cash on the sidelines won’t be able to generate the yields that investors became accustomed to, I believe that BP will become much more attractive and could be looked at as an undervalued gem as investors are getting paid over 5% from a company that trades at a low valuation. Seeking Alpha Conclusion I think that BP’s upward trajectory can continue into the end of the year as its strategic pivot back to its upstream business continues to unfold. BP is bringing more projects online and making critical final investment decisions that could shape the future of the company back to its roots in the upstream segment of the energy sector. I think that investors are getting a great deal on BP’s assets at less than 15 times 2025 earnings while getting paid over 5% on the dividend. As the demand for energy continues to increase and the hyperscalers continue to allocate massive amounts of capital toward CapEx, BP is in a position to drive larger amounts of profitability to the bottom line, which could mean larger buybacks and dividends in the future, as BP has committed to returning larger amounts of capital to shareholders to create value. I think that BP is positioned to generate further capital appreciation from the current trend while providing investors with a growing dividend in the future that exceeds the risk-free rate of return. 41.34K Followers Analyst’s Disclosure: I/we have a beneficial long position in the shares of BP, AMZN, GOOGL, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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[Home](https://seekingalpha.com/#source=first_level_url%3Aarticle%7Ccontent_type%3Aall%7Csection%3Apage_breadcrumbs) 2. [Dividends Analysis](https://seekingalpha.com/dividends#source=first_level_url%3Aarticle%7Ccontent_type%3Aall%7Csection%3Apage_breadcrumbs) 3. [Dividend Ideas](https://seekingalpha.com/dividends/dividend-ideas#source=first_level_url%3Aarticle%7Ccontent_type%3Aall%7Csection%3Apage_breadcrumbs) 4. [Energy Analysis](https://seekingalpha.com/stock-ideas/energy#source=first_level_url%3Aarticle%7Ccontent_type%3Aall%7Csection%3Apage_breadcrumbs) - [United Kingdom](https://seekingalpha.com/market-outlook/global-investing/analysis/united-kingdom#source=section%3Amain_content%7Csection_asset%3Athemes%7Cbutton%3Aunited-kingdom%7Cfirst_level_url%3Aarticle) # BP: It Was Too Low Last Year, And It's Still Too Low Sep 09, 2025, 8:30 AM ET[BP p.l.c. (BP) Stock](https://seekingalpha.com/symbol/BP#source=section%3Amain_content%7Csection_asset%3Ameta%7Cfirst_level_url%3Aarticle%7Csymbol%3ABP) ![](https://seekingalpha.com/images/users_profile/012/629/971/big_pic.png?io=w36) [Steven Fiorillo](https://seekingalpha.com/author/steven-fiorillo#source=url_first_level%3Aarticle%7Csection%3Aauthor_brief%3Asteven-fiorillo%7Csection_asset%3Aauthor_brief%7Cauthor_name) 41\.34K Followers Follow - 5 Share - Save - Play(14min) - [Comments (13)](https://seekingalpha.com/article/4820246-bp-it-was-too-low-last-year-still-too-low#scroll_comments) ## Summary - BP remains undervalued, trading at just 13 times 2025 earnings, with a 5.7% dividend yield, offering a compelling value proposition. - Strong Q2 results, operational efficiency, and strategic upstream focus position BP for future growth and margin expansion. - Rising global energy demand, driven by hyperscaler CapEx and data center expansion, creates long-term tailwinds for BP's business. - BP's commitment to buybacks, dividend growth, and cost reductions supports capital appreciation and attractive shareholder returns. ![Money growth](https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1445810162/image_1445810162.jpg?io=getty-c-w750) PM Images/DigitalVision via Getty Images BP p.l.c. ([BP](https://seekingalpha.com/symbol/BP#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) has been a horrible investment over the past decade compared to simply investing in an S\&P 500 index fund. Over the past decade, just allocating capital toward the SPDR S\&P 500 ETF ([SPY](https://seekingalpha.com/symbol/SPY#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) would have generated a 229.94% return, while shares of BP are up 10.66% before the dividends are accounted for. BP has been ridden with the consequences of Deepwater Horizon since 2010, when one of their rigs created the largest marine oil spill in history and an identity problem as BP tried to figure out what type of energy company it would be. Regardless of what has happened in the past, shares of BP were too low last year, and their still too low now. The reality is that BP is an \$88.65 billion company that is generating \$8.59 billion in free cash flow ([FCF](https://seekingalpha.com/symbol/FCF#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) and trades at 13.16 times 2025 earnings while paying a dividend of \$1.94, which is a 5.65% yield. There is a lot of value left to be unlocked, especially with how the [EIA](https://www.eia.gov/outlooks/steo/ "https://www.eia.gov/outlooks/steo/") is projecting how the production and consumption of energy are expected to expand going forward. As the hyperscalers deploy hundreds of billions on CapEx for their advancements in A.I. through additional data centers annually, the amount of energy used will continue to expand, which is bullish for BP. I think that investors are getting a tremendous value play with shares of BP, as there is forward EPS growth on the horizon and its shares seem to be undervalued while paying a dividend yield that exceeds the risk-free rate of return. [![BP](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755081700087_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755081700087_origin.png) Seeking Alpha ## **Following up on my article on BP** When shares of BP fell below \$30, causing the dividend yield to approach 7%, I said that this was an incredible deal. My last article was written on May 2nd ([can be read here](https://seekingalpha.com/article/4781071-bps-dividend-approaches-7-percent-and-a-fundamental-shift-toward-upstream-looks-promising#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), and since then shares of BP have climbed 21.35%, while the S\&P 500 has increased by 14.80%. When the dividends are accounted for, BP’s total return was 25.12%. I had felt that BP’s strategic pivot back to traditional energy sources was the right move and provided investors with a compelling long-term opportunity. After going through the numbers, it looked as if BP’s strategic focus on upstream business, cost reduction, and asset divestitures could boost FCF and shareholder value in the future. At the time investors were able to lock in a yield at close to 7%, and while that opportunity is in the past, I still believe there is a lot of upside going forward. I am following up with a new article to discuss why I believe BP offers a compelling value proposition for investors at a time when the demand for energy continues to increase. [![BP](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083309972_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083309972_origin.png) Seeking Alpha ## **Risks to investing in BP** While I am bullish on BP, there are significant risk factors for investors to consider, and everyone should do their due diligence. The growth in CapEx allocations could slow down, and the data center expansion that has been fueling additional energy utilization could decline. If this happens, BP may not be in a position to drill as much oil as they had originally projected. We could also see OPEC+ increase oil production, causing the price per barrel to decrease, causing a disruption to BP’s top and bottom lines. With the advancements in technology, BP could find themselves in a position where breakthroughs in technology cause larger amounts of efficiencies throughout products that require electricity. Advancements in technology could also cause breakthroughs in energy production, lowering the price per kilowatt hour and making oil and gas less appealing. BP has also been a horrible investment compared to investing in the S\&P 500. ## **BP delivered strong Q2 results and showcased why it's still creating value for shareholders** [BP](https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-second-quarter-2025-results.pdf "https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-second-quarter-2025-results.pdf") delivered a strong operational performance in Q2 as their upstream plant reliability and refining availability exceeded 96%. BP’s upstream advancements helped set the stage for future growth as 5 of their 10 major project start-ups planned through 2027 were delivered. BP brought online the first oil at the Argos Southwest extension in the Gulf of America and its first gas at Mento in Trinidad, while the Azule joint venture's start-up of the Agogo Integrated West Hub Project in Angola came online. BPX Energy in the US Permian Basin launched Crossroads to support production growth. BP also made 4 final investment decisions (FIDs) which included the Shah Deniz Compression project in Azerbaijan and the Atlantis Major Facility Expansion in the Gulf of America. BP’s exploration efforts generated 10 discoveries YTD, with the Bumerangue block discovery in Brazil revealing an estimated 500-meter gross hydrocarbon column in a high-quality pre-salt carbonate reservoir. BP is also focusing on its downstream and transition segments, as Castrol's earnings were up over 20% in the first half of 2025. BP was able to lean on its investments in technology and A.I. to enhance its operational efficiency as they recognized a 90% reduction in well planning time in Azerbaijan, a 5% increase in production through digital tools, and a 50% increase in marketing material production. BP is continuing to utilize its ERP system with the goal of implementing a unified data platform to drive further cost efficiencies and leverage AI across the company. BP produced an underlying replacement cost profit in Q2 of \$2.4 billion, which was an increase from \$1.4 billion in Q1. This was driven by a surge in average gas marketing and trading, which recognized stronger realized refining margins and improved customer business performance. BP’s operating cash flow came in at \$6.2 billion in Q2, which included a \$1.4 billion working capital build. BP’s net debt decreased by \$1 billion to \$26.0 billion, which indicated that cash inflows from higher operating cash flow and divestment proceeds surpassed cash outflows. BP allocated \$2.4 billion toward CapEx in Q2, which brought their annualized CapEx allocation to \$7 billion in the first half of 2025, which is in line with their target of around \$14.5 billion for the year. BP was able to increase the dividend by 4% while they increased their share buyback program by \$750 million in Q3. BP has achieved roughly \$1.7 billion in savings since the beginning of 2024 as they work toward their \$4-5 billion target by the end of 2027. As BP streamlines its business processes and develops new projects, their margins could improve while operational cash flow increases over time. As the demand for energy grows, their CapEx investments could play a critical role in unlocking future value, as BP has a portfolio of assets that’s hard to match. [![Q2 Investor Deck](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755085518343_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755085518343_origin.png) BP BP is strategically positioned for future growth as it continues to execute on its 12-quarter plan, which focuses on increasing shareholder value. [BP’s](https://seekingalpha.com/article/4808800-bp-p-l-c-bp-q2-2025-earnings-call-transcript#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) goal is to achieve a CAGR of over 20% in adjusted free cash flow through 2027, get to a net debt target of \$14-18 billion by the end of 2027, and reduce costs by \$4-\$5 billion over this period. BP is actively reshaping its portfolio by progressing the strategic review of Castrol and divesting non-core assets such as its Netherlands mobility business and US onshore wind assets. BP continues to reduce the number of ERP systems as they lean toward harnessing the power of A.I. from their software platforms as their digital tools are optimizing production at offshore oil and gas facilities. BP has been able to increase production by around 5% and protect over 10% more from going offline through their enhanced capabilities. BP is leading toward generative A.I. to reduce well planning time by 90% in Azerbaijan as its learnings from upstream digitization are being applied to the refining business to remove costs and optimize operations. These technological advancements are not only driving cost reductions but also improving capital productivity across the portfolio, which should lead to margin expansion and larger profitability in the future from a portfolio that has a lower leverage ratio. ## **The demand for energy is expected to expand and BP looks like a value play that can generate capital appreciation and large dividends for shareholders** When I look at Amazon ([AMZN](https://seekingalpha.com/symbol/AMZN#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), Meta Platforms ([META](https://seekingalpha.com/symbol/META#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), Microsoft ([MSFT](https://seekingalpha.com/symbol/MSFT#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), and Alphabet ([GOOGL](https://seekingalpha.com/symbol/GOOGL#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), they are continuing to increase their allocations toward CapEx, which is being predominantly spent on expanding their data centers. In Q2 these 4 companies allocated \$88.25 billion toward CapEx, which was a 66.97% increase YoY compared to the \$52.85 billion they spent in Q2 2024. Over the past year these companies have spent \$291.35 billion on CapEx, and they have all committed to allocating more in the future. The EIA is expecting that the global consumption and production of liquid fuels through the end of 2026 will continue to increase. As the largest companies expand their data center footprints, more electricity will be needed, and we could see the long-term effects change the dynamics of how the long-term energy outlooks look. BP is in a prime position to benefit from the changing narrative around oil and gas while the demand for energy continues to increase. [![Liquid Fuel projection](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755084964972_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755084964972_origin.png) EIA [![AMZN, GOOGL, MSFT, META CapEX](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571757116394217_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571757116394217_origin.png) Steven Fiorillo, Seeking Alpha [BP](https://seekingalpha.com/symbol/BP/earnings/estimates#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) is trading like a tobacco company, yet its products are a necessity for the global economy to function. Today, shares of BP are trading at 13 times 2025 earnings, and it is expected to grow its EPS by 24.9% over the next two years, making it trade at 10.41 times 2027 earnings. [Altria Group](https://seekingalpha.com/symbol/MO/earnings/estimates#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) ([MO](https://seekingalpha.com/symbol/MO#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) trades at 12.23 times 2025 earnings and is expected to grow its EPS by 6.62% over the next two years. MO trades at 11.47 times 2027 earnings compared to BP, which trades at 10.41 times with a fraction of the EPS growth. Shares of BP have been discounted for far too long, as this company is a cash cow with tailwinds from expanded energy demands in the future. I don’t think that oil and gas will continue to trade at these types of valuations in the future, especially with the amount of growth the market is expecting. [![BP Forward EPS](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083563085_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083563085_origin.png) Steven Fiorillo, Seeking Alpha Over the past decade, BP has generated \$19.80 in [dividend income](https://seekingalpha.com/symbol/BP/dividends/history#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link), which is 63.87% of its share price from 9/6/15. BP has had an average annual yield of 6.39% despite reducing the dividend during 2020. Currently investors are getting a \$1.94 dividend, which is a 5.72% yield in an environment where the Fed is expected to start cutting rates. BP’s dividend will look exceptionally strong as risk-free assets start to decline. BP has been committed to returning capital back to shareholders through buybacks and the dividend, which was just increased by 4%. As capital flows back into the market because cash on the sidelines won’t be able to generate the yields that investors became accustomed to, I believe that BP will become much more attractive and could be looked at as an undervalued gem as investors are getting paid over 5% from a company that trades at a low valuation. [![BP Dividends](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083072445_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083072445_origin.png) Seeking Alpha ## **Conclusion** I think that BP’s upward trajectory can continue into the end of the year as its strategic pivot back to its upstream business continues to unfold. BP is bringing more projects online and making critical final investment decisions that could shape the future of the company back to its roots in the upstream segment of the energy sector. I think that investors are getting a great deal on BP’s assets at less than 15 times 2025 earnings while getting paid over 5% on the dividend. As the demand for energy continues to increase and the hyperscalers continue to allocate massive amounts of capital toward CapEx, BP is in a position to drive larger amounts of profitability to the bottom line, which could mean larger buybacks and dividends in the future, as BP has committed to returning larger amounts of capital to shareholders to create value. I think that BP is positioned to generate further capital appreciation from the current trend while providing investors with a growing dividend in the future that exceeds the risk-free rate of return. This article was written by ![](https://seekingalpha.com/images/users_profile/012/629/971/big_pic.png?io=w36) [Steven Fiorillo](https://seekingalpha.com/author/steven-fiorillo#source=url_first_level%3Aarticle%7Csection%3Aauthor_root%3Asteven-fiorillo%7Csection_asset%3Aauthor_root%7Cauthor_name) 41\.34K Followers Follow I am focused on growth and dividend income. My personal strategy revolves around setting myself up for an easy retirement by creating a portfolio which focuses on compounding dividend income and growth. Dividends are an intricate part of my strategy as I have structured my portfolio to have monthly dividend income which grows through dividend reinvestment and yearly increases. Feel free to reach out to me on Seeking Alpha Show more Show more **Analyst’s Disclosure:** I/we have a beneficial long position in the shares of BP, AMZN, GOOGL, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you. **Seeking Alpha's Disclosure:** Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. - Like - Share - Print - [Comments (13)](https://seekingalpha.com/article/4820246-bp-it-was-too-low-last-year-still-too-low#scroll_comments) ### Recommended For You ![](https://seekingalpha.com/images/users_profile/009/866/571/big_pic.png?io=w36) ### [Expand Energy's Discount Offers Upside](https://seekingalpha.com/article/4889424-expand-energy-stock-discount-offers-upside#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A1) Daniel Jones ![](https://seekingalpha.com/images/users_profile/009/932/311/big_pic.png?io=w36) ### [Exxon Mobil: Buy, But Only If You Accept The Oil Shock Premium](https://seekingalpha.com/article/4888602-exxon-mobil-buy-but-only-if-you-accept-the-oil-shock-premium#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A2) Dhierin Bechai ![](https://seekingalpha.com/images/users_profile/034/591/885/big_pic.png?io=w36) ### [Meren Energy - Higher Prices Come At A Critical Point](https://seekingalpha.com/article/4889014-meren-energy-higher-prices-come-at-a-critical-point#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A3) The Value Portfolio ![](https://seekingalpha.com/images/users_profile/061/549/894/big_pic.png?io=w36) ### [Canadian Natural: The Gold Standard Of Canadian Energy](https://seekingalpha.com/article/4889165-canadian-natural-the-gold-standard-of-canadian-energy#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A4) Louis Gerard ![](https://seekingalpha.com/images/users_profile/009/932/311/big_pic.png?io=w36) ### [Kinder Morgan: The Rally Makes Sense, But So Does More Upside](https://seekingalpha.com/article/4889202-kinder-morgan-the-rally-makes-sense-but-so-does-more-upside#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A5) Dhierin Bechai ![](https://seekingalpha.com/images/users_profile/001/057/833/big_pic.png?io=w36) ### [HMH Holding: A Rare Public Offering In This Market](https://seekingalpha.com/article/4888515-hmh-holding-rare-public-offering-in-this-market#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A6) The Value Investor ![](https://seekingalpha.com/images/users_profile/001/996/871/big_pic.png?io=w36) ### [Sabine Royalty Trust Appears Slightly Overvalued](https://seekingalpha.com/article/4889234-sabine-royalty-trust-appears-slightly-overvalued#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A7) Aristofanis Papadatos ![](https://seekingalpha.com/images/users_profile/009/932/311/big_pic.png?io=w36) ### [Energy Transfer: 7.1% Yield And Potential Export Tailwinds Support Buy Case](https://seekingalpha.com/article/4889269-energy-transfer-7-1-percent-yield-and-potential-export-tailwinds-support-buy-case#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A8) Dhierin Bechai ![](https://seekingalpha.com/images/users_profile/012/629/971/big_pic.png?io=w36) ### [Kinder Morgan: The Natural Gas Supercycle Is Here (Rating Upgrade)](https://seekingalpha.com/article/4888595-kinder-morgan-stock-natural-gas-supercycle-here-rating-upgrade#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A9) Steven Fiorillo ![](https://seekingalpha.com/images/users_profile/025/765/463/big_pic.png?io=w36) ### [Black Stone Minerals: Built For The Data Center Energy Boom](https://seekingalpha.com/article/4888766-black-stone-minerals-built-for-the-data-center-energy-boom#source=section%3Arecommended_for_you%7Csection_asset%3Aintegrated%7Cfirst_level_url%3Aarticle%7Cvariation_group%3Avariation_a%7Cline%3A10) Gold Mining Bull ### Comments (13) Newest If you type a company or ETF ticker symbol in capital letters we will automatically link to the symbol page. You can remove the link by deleting the \$ in the comment. Publish B [Bollywood](https://seekingalpha.com/user/49513293) Sep 21, 2025, 10:28 AM Premium [Comments (3)](https://seekingalpha.com/user/49513293) \| \+ Follow Until they remove the entire board of directors and current executive leadership stay away from this stock. There are better investments out there. Reply Like (1) ![](https://seekingalpha.com/images/users_profile/050/994/536/small_pic.png?t=2fdf7c64de) [Weather Man](https://seekingalpha.com/user/50994536) Sep 10, 2025, 8:21 AM [PRO](https://seekingalpha.com/checkout/proplus#source=first_level_url%3Anews%7Csection%3Acomments%7Csection_asset%3Abadge%7Cbutton%3APRO) [Comments (4.25K)](https://seekingalpha.com/user/50994536) \| \+ Follow BP's exposure to Green Insanity rightly penalizes the stock price. Reply Like (1) h [hiddenhand](https://seekingalpha.com/user/59934091) Sep 09, 2025, 9:43 AM Premium [Comments (459)](https://seekingalpha.com/user/59934091) \| \+ Follow BP did not commit the largest marine oil spill in history. That title belongs to Pemex, whose bay of Campeche blowout in 1980 spewed oil into the gulf for 2 years. However, because the democrats and their trial lawyers could not sue the Mexicans, the American media ignored it and apparently only a few of us elderly oil folks care to remember. Reply Like (6) d [doc47](https://seekingalpha.com/user/929967) Sep 09, 2025, 11:42 AM Premium [Comments (4.51K)](https://seekingalpha.com/user/929967) \| \+ Follow [@hiddenhand](https://seekingalpha.com/user/59934091#source=section%3Acomment%7Csection_asset%3Acomment%7Cfirst_level_url%3Aarticle%7Ccontent_id%3A4820246%7Ccomment_id%3A101051069) Being \#2 in this "contest" neither not justifies the error nor grants respect. Reply Like d [doc47](https://seekingalpha.com/user/929967) Sep 09, 2025, 11:43 AM Premium [Comments (4.51K)](https://seekingalpha.com/user/929967) \| \+ Follow [@doc47](https://seekingalpha.com/user/929967#source=section%3Acomment%7Csection_asset%3Acomment%7Cfirst_level_url%3Aarticle%7Ccontent_id%3A4820246%7Ccomment_id%3A101051084) Sorry, please remove "not" from my comment. Reply Like ![](https://seekingalpha.com/images/users_profile/012/418/201/small_pic.png?t=1ceceb9155) [fhbecker](https://seekingalpha.com/user/12418201) Sep 09, 2025, 1:39 PM [Comments (5.31K)](https://seekingalpha.com/user/12418201) \| \+ Follow [@hiddenhand](https://seekingalpha.com/user/59934091#source=section%3Acomment%7Csection_asset%3Acomment%7Cfirst_level_url%3Aarticle%7Ccontent_id%3A4820246%7Ccomment_id%3A101052125) Sorry, no the Campeche spill (Ixtoc 1) leaked from 454,000 to 480,000 Tonnes of oil and the Deepwater horizon leaked 492,000 to 627,000 Tonnes of oil [en.wikipedia.org/...](https://en.wikipedia.org/wiki/List_of_oil_spills "https://en.wikipedia.org/wiki/List_of_oil_spills") I still have gallon of Campeche oil that I collected along the Texas beaches. Reply Like See More Replies Add A Comment Disagree with this article? [Submit your own](https://about.seekingalpha.com/become-an-analyst). To report a factual error in this article, click here . Your feedback matters to us\! ### About BP Stock | Symbol | Last Price | % Chg | |---|---|---| | [BP](https://seekingalpha.com/symbol/BP#source=first_level_url%3Aarticle%7Csection%3Aright_rail%7Csection_asset%3Aabout%7Cline%3A1%7Csymbol%3ABP) BP p.l.c. | 45\.90 | 0\.02% | | Post | 45\.76 | \-0.31% | - 1D - 5D - 1M - 6M - 1Y - 5Y - 10Y ###### Chart Combination chart with 2 data series. View as data table, Chart The chart has 1 X axis displaying Time. Data ranges from 2025-04-09 00:00:00 to 2026-04-09 00:00:00. The chart has 1 Y axis displaying values. Data ranges from 26.23 to 47.48. Created with Highcharts 12.5.0 May '25 Aug '25 Nov '25 Feb '26 20 40 60 End of interactive chart. Market Cap \$115.95B PE (FWD) 10\.28 Yield 4\.31% Rev Growth (YoY) 0\.13% Short Interest \- Prev. Close \$45.89 [bp Summary](https://seekingalpha.com/symbol/BP/virtual_analyst_report) Compare to Peers ### More on BP ### [U.K. pension fund body latest dissenter to BP Chair, other board-supported resolutions](https://seekingalpha.com/news/4573814-u-k-pension-fund-body-latest-dissenter-to-bp-chair-other-board-supported-resolutions#source=section_asset%3Amore-on%7Csection%3Aright_rail%7Cfirst_level_url%3Aarticle%7Cline%3A1%7Cpos%3Aundefined) ### [BP Chair Manifold faces re-election battle as opposition mounts over blocked climate resolution](https://seekingalpha.com/news/4573044-bp-chair-manifold-faces-re-election-battle-as-opposition-mounts-over-blocked-climate-resolution#source=section_asset%3Amore-on%7Csection%3Aright_rail%7Cfirst_level_url%3Aarticle%7Cline%3A2%7Cpos%3Aundefined) ### [BP shareholders should reject revised climate disclosure, ISS says](https://seekingalpha.com/news/4572766-bp-shareholders-should-reject-revised-climate-disclosure-iss-says#source=section_asset%3Amore-on%7Csection%3Aright_rail%7Cfirst_level_url%3Aarticle%7Cline%3A3%7Cpos%3Aundefined) ### [Five EU nations reportedly propose windfall tax on energy firms](https://seekingalpha.com/news/4572527-eu-nations-propose-windfall-tax-energy-firms#source=section_asset%3Amore-on%7Csection%3Aright_rail%7Cfirst_level_url%3Aarticle%7Cline%3A4%7Cpos%3Aundefined) ### Related Stocks | Symbol | Last Price | % Chg | |---|---|---| | [BP](https://seekingalpha.com/symbol/BP#source=first_level_url%3Anews%7Csection%3Aright_rail%7Csection_asset%3Aabout%7Cline%3A1%7Csymbol%3Abp) BP | 45\.90 | 0\.02% | | Post: | 45\.76 | \-0.31% | - 1D - 5D - 1M - 6M - 1Y - 5Y - 10Y ###### Chart Chart with 159 data points. View as data table, Chart The chart has 1 X axis displaying Time. Data ranges from 2026-04-06 09:30:00 to 2026-04-09 15:50:00. The chart has 1 Y axis displaying values. Data ranges from 44.6 to 47.72. Created with Highcharts 12.5.0 Apr 6 Apr 7 Apr 8 Apr 9 44 46 48 End of interactive chart. 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Readable Markdown
![Money growth](https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1445810162/image_1445810162.jpg?io=getty-c-w750) PM Images/DigitalVision via Getty Images BP p.l.c. ([BP](https://seekingalpha.com/symbol/BP#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) has been a horrible investment over the past decade compared to simply investing in an S\&P 500 index fund. Over the past decade, just allocating capital toward the SPDR S\&P 500 ETF ([SPY](https://seekingalpha.com/symbol/SPY#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) would have generated a 229.94% return, while shares of BP are up 10.66% before the dividends are accounted for. BP has been ridden with the consequences of Deepwater Horizon since 2010, when one of their rigs created the largest marine oil spill in history and an identity problem as BP tried to figure out what type of energy company it would be. Regardless of what has happened in the past, shares of BP were too low last year, and their still too low now. The reality is that BP is an \$88.65 billion company that is generating \$8.59 billion in free cash flow ([FCF](https://seekingalpha.com/symbol/FCF#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) and trades at 13.16 times 2025 earnings while paying a dividend of \$1.94, which is a 5.65% yield. There is a lot of value left to be unlocked, especially with how the [EIA](https://www.eia.gov/outlooks/steo/ "https://www.eia.gov/outlooks/steo/") is projecting how the production and consumption of energy are expected to expand going forward. As the hyperscalers deploy hundreds of billions on CapEx for their advancements in A.I. through additional data centers annually, the amount of energy used will continue to expand, which is bullish for BP. I think that investors are getting a tremendous value play with shares of BP, as there is forward EPS growth on the horizon and its shares seem to be undervalued while paying a dividend yield that exceeds the risk-free rate of return. [![BP](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755081700087_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755081700087_origin.png) Seeking Alpha ## **Following up on my article on BP** When shares of BP fell below \$30, causing the dividend yield to approach 7%, I said that this was an incredible deal. My last article was written on May 2nd ([can be read here](https://seekingalpha.com/article/4781071-bps-dividend-approaches-7-percent-and-a-fundamental-shift-toward-upstream-looks-promising#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), and since then shares of BP have climbed 21.35%, while the S\&P 500 has increased by 14.80%. When the dividends are accounted for, BP’s total return was 25.12%. I had felt that BP’s strategic pivot back to traditional energy sources was the right move and provided investors with a compelling long-term opportunity. After going through the numbers, it looked as if BP’s strategic focus on upstream business, cost reduction, and asset divestitures could boost FCF and shareholder value in the future. At the time investors were able to lock in a yield at close to 7%, and while that opportunity is in the past, I still believe there is a lot of upside going forward. I am following up with a new article to discuss why I believe BP offers a compelling value proposition for investors at a time when the demand for energy continues to increase. [![BP](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083309972_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083309972_origin.png) Seeking Alpha ## **Risks to investing in BP** While I am bullish on BP, there are significant risk factors for investors to consider, and everyone should do their due diligence. The growth in CapEx allocations could slow down, and the data center expansion that has been fueling additional energy utilization could decline. If this happens, BP may not be in a position to drill as much oil as they had originally projected. We could also see OPEC+ increase oil production, causing the price per barrel to decrease, causing a disruption to BP’s top and bottom lines. With the advancements in technology, BP could find themselves in a position where breakthroughs in technology cause larger amounts of efficiencies throughout products that require electricity. Advancements in technology could also cause breakthroughs in energy production, lowering the price per kilowatt hour and making oil and gas less appealing. BP has also been a horrible investment compared to investing in the S\&P 500. ## **BP delivered strong Q2 results and showcased why it's still creating value for shareholders** [BP](https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-second-quarter-2025-results.pdf "https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-second-quarter-2025-results.pdf") delivered a strong operational performance in Q2 as their upstream plant reliability and refining availability exceeded 96%. BP’s upstream advancements helped set the stage for future growth as 5 of their 10 major project start-ups planned through 2027 were delivered. BP brought online the first oil at the Argos Southwest extension in the Gulf of America and its first gas at Mento in Trinidad, while the Azule joint venture's start-up of the Agogo Integrated West Hub Project in Angola came online. BPX Energy in the US Permian Basin launched Crossroads to support production growth. BP also made 4 final investment decisions (FIDs) which included the Shah Deniz Compression project in Azerbaijan and the Atlantis Major Facility Expansion in the Gulf of America. BP’s exploration efforts generated 10 discoveries YTD, with the Bumerangue block discovery in Brazil revealing an estimated 500-meter gross hydrocarbon column in a high-quality pre-salt carbonate reservoir. BP is also focusing on its downstream and transition segments, as Castrol's earnings were up over 20% in the first half of 2025. BP was able to lean on its investments in technology and A.I. to enhance its operational efficiency as they recognized a 90% reduction in well planning time in Azerbaijan, a 5% increase in production through digital tools, and a 50% increase in marketing material production. BP is continuing to utilize its ERP system with the goal of implementing a unified data platform to drive further cost efficiencies and leverage AI across the company. BP produced an underlying replacement cost profit in Q2 of \$2.4 billion, which was an increase from \$1.4 billion in Q1. This was driven by a surge in average gas marketing and trading, which recognized stronger realized refining margins and improved customer business performance. BP’s operating cash flow came in at \$6.2 billion in Q2, which included a \$1.4 billion working capital build. BP’s net debt decreased by \$1 billion to \$26.0 billion, which indicated that cash inflows from higher operating cash flow and divestment proceeds surpassed cash outflows. BP allocated \$2.4 billion toward CapEx in Q2, which brought their annualized CapEx allocation to \$7 billion in the first half of 2025, which is in line with their target of around \$14.5 billion for the year. BP was able to increase the dividend by 4% while they increased their share buyback program by \$750 million in Q3. BP has achieved roughly \$1.7 billion in savings since the beginning of 2024 as they work toward their \$4-5 billion target by the end of 2027. As BP streamlines its business processes and develops new projects, their margins could improve while operational cash flow increases over time. As the demand for energy grows, their CapEx investments could play a critical role in unlocking future value, as BP has a portfolio of assets that’s hard to match. [![Q2 Investor Deck](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755085518343_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755085518343_origin.png) BP BP is strategically positioned for future growth as it continues to execute on its 12-quarter plan, which focuses on increasing shareholder value. [BP’s](https://seekingalpha.com/article/4808800-bp-p-l-c-bp-q2-2025-earnings-call-transcript#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) goal is to achieve a CAGR of over 20% in adjusted free cash flow through 2027, get to a net debt target of \$14-18 billion by the end of 2027, and reduce costs by \$4-\$5 billion over this period. BP is actively reshaping its portfolio by progressing the strategic review of Castrol and divesting non-core assets such as its Netherlands mobility business and US onshore wind assets. BP continues to reduce the number of ERP systems as they lean toward harnessing the power of A.I. from their software platforms as their digital tools are optimizing production at offshore oil and gas facilities. BP has been able to increase production by around 5% and protect over 10% more from going offline through their enhanced capabilities. BP is leading toward generative A.I. to reduce well planning time by 90% in Azerbaijan as its learnings from upstream digitization are being applied to the refining business to remove costs and optimize operations. These technological advancements are not only driving cost reductions but also improving capital productivity across the portfolio, which should lead to margin expansion and larger profitability in the future from a portfolio that has a lower leverage ratio. ## **The demand for energy is expected to expand and BP looks like a value play that can generate capital appreciation and large dividends for shareholders** When I look at Amazon ([AMZN](https://seekingalpha.com/symbol/AMZN#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), Meta Platforms ([META](https://seekingalpha.com/symbol/META#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), Microsoft ([MSFT](https://seekingalpha.com/symbol/MSFT#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), and Alphabet ([GOOGL](https://seekingalpha.com/symbol/GOOGL#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)), they are continuing to increase their allocations toward CapEx, which is being predominantly spent on expanding their data centers. In Q2 these 4 companies allocated \$88.25 billion toward CapEx, which was a 66.97% increase YoY compared to the \$52.85 billion they spent in Q2 2024. Over the past year these companies have spent \$291.35 billion on CapEx, and they have all committed to allocating more in the future. The EIA is expecting that the global consumption and production of liquid fuels through the end of 2026 will continue to increase. As the largest companies expand their data center footprints, more electricity will be needed, and we could see the long-term effects change the dynamics of how the long-term energy outlooks look. BP is in a prime position to benefit from the changing narrative around oil and gas while the demand for energy continues to increase. [![Liquid Fuel projection](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755084964972_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755084964972_origin.png) EIA [![AMZN, GOOGL, MSFT, META CapEX](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571757116394217_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571757116394217_origin.png) Steven Fiorillo, Seeking Alpha [BP](https://seekingalpha.com/symbol/BP/earnings/estimates#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) is trading like a tobacco company, yet its products are a necessity for the global economy to function. Today, shares of BP are trading at 13 times 2025 earnings, and it is expected to grow its EPS by 24.9% over the next two years, making it trade at 10.41 times 2027 earnings. [Altria Group](https://seekingalpha.com/symbol/MO/earnings/estimates#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link) ([MO](https://seekingalpha.com/symbol/MO#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link)) trades at 12.23 times 2025 earnings and is expected to grow its EPS by 6.62% over the next two years. MO trades at 11.47 times 2027 earnings compared to BP, which trades at 10.41 times with a fraction of the EPS growth. Shares of BP have been discounted for far too long, as this company is a cash cow with tailwinds from expanded energy demands in the future. I don’t think that oil and gas will continue to trade at these types of valuations in the future, especially with the amount of growth the market is expecting. [![BP Forward EPS](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083563085_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083563085_origin.png) Steven Fiorillo, Seeking Alpha Over the past decade, BP has generated \$19.80 in [dividend income](https://seekingalpha.com/symbol/BP/dividends/history#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link), which is 63.87% of its share price from 9/6/15. BP has had an average annual yield of 6.39% despite reducing the dividend during 2020. Currently investors are getting a \$1.94 dividend, which is a 5.72% yield in an environment where the Fed is expected to start cutting rates. BP’s dividend will look exceptionally strong as risk-free assets start to decline. BP has been committed to returning capital back to shareholders through buybacks and the dividend, which was just increased by 4%. As capital flows back into the market because cash on the sidelines won’t be able to generate the yields that investors became accustomed to, I believe that BP will become much more attractive and could be looked at as an undervalued gem as investors are getting paid over 5% from a company that trades at a low valuation. [![BP Dividends](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083072445_origin.png?io=w640)](https://static.seekingalpha.com/uploads/2025/9/6/12629971-17571755083072445_origin.png) Seeking Alpha ## **Conclusion** I think that BP’s upward trajectory can continue into the end of the year as its strategic pivot back to its upstream business continues to unfold. BP is bringing more projects online and making critical final investment decisions that could shape the future of the company back to its roots in the upstream segment of the energy sector. I think that investors are getting a great deal on BP’s assets at less than 15 times 2025 earnings while getting paid over 5% on the dividend. As the demand for energy continues to increase and the hyperscalers continue to allocate massive amounts of capital toward CapEx, BP is in a position to drive larger amounts of profitability to the bottom line, which could mean larger buybacks and dividends in the future, as BP has committed to returning larger amounts of capital to shareholders to create value. I think that BP is positioned to generate further capital appreciation from the current trend while providing investors with a growing dividend in the future that exceeds the risk-free rate of return. 41\.34K Followers **Analyst’s Disclosure:** I/we have a beneficial long position in the shares of BP, AMZN, GOOGL, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you. **Seeking Alpha's Disclosure:** Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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