BP drops off the shopping list for income seekers

This morning, BP announced plans to sell $30bn worth of its assets, and confirmed cancellation of dividend payouts until at least February 2011. Nick Raynor, investment advisor at The Share Centre explains what this means for investors.

"These results see BP report its biggest ever loss as it pays the price of the oil spill in the Gulf of Mexico. The company announced pre-tax losses of $16.97bn for Q2, compared to $3.14bn profit last year, as it puts aside a $32bn provision to pay for the clean up.

"Going forward however, the company's strategy is encouraging. Along with new chief executive, Bob Dudley, BP has accelerated its plans to sell off assets from $10bn to $30bn, resulting in a smaller but higher quality business. Its plan to reduce its debt to $10bn - $15bn in the next 18 months is also a positive sign.

"For investors the ride ahead could be a long one, as along with the cancellation of dividend payments until at least February 2011, there is also the chance that the company is sued for negligence.

"As such, for the majority of investors, we would suggest BP as a hold due to the level of risk unless the investor is not risk adverse, in which case the company could present an opportunity as a longer term investment.

"Those looking for income in the interim would do well to consider Vodafone and Royal Dutch Shell.