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After the US attacked Iran on Saturday, 27 March, global stock markets started tumbling from 2026’s highs. This latest war in the Middle East triggered another oil shock, with energy prices surging worldwide. However, as oil prices soared, so too did the BP (LSE: BP) share price. Alas, it’s not always been plain sailing for BP shareholders.
BP stock gushes
At its 52-week low, BP stock hit 337.65p on 1 May 2025. This would have been an excellent time to buy into the British oil & gas supermajor, with its shares spurting higher since.
On Friday, 17 April, the BP share price closed at 541p, valuing the former British Petroleum at £91.9bn. This makes BP the ninth-largest company in the FTSE 100 index. However, the shares plunged by 43p (-7.4%) on Friday, tracking the oil price south as geopolitical tensions eased.
Despite this, BP stock is up 50.5% over one year and 85.2% over five — easily beating the Footsie over both periods. What’s more, the above figures all exclude cash dividends, which gush freely from BP’s coffers to shareholders’ bank accounts.
BP: big payouts
Disclosure: my family portfolio owns BP stock, having paid 484.1p a share for our stake in August 2023. What made us decide to buy into Britain’s second-biggest energy firm? First, we bought BP shares partly as a hedge against higher oil prices. Second, to collect a share of BP’s gushing dividends.
After this latest sudden slide in the BP share price, the stock offers a market-beating dividend yield of 4.5% a year. This is 50% higher than the 3% a year on offer from the wider FTSE 100.
Moreover, we don’t spend our quarterly BP dividends. Instead, we reinvest this passive income by buying yet more shares. This increases our shareholding, helping to raise our future returns as BP owners.
BP: bumpy periods
Then again, the past five years have sometimes seen rough rides for BP shareholders. The five-year share chart resembles the teeth of a saw, with the price rising and then falling back, only to climb steeply over the past 12 months.
To be honest, I’m not particularly happy after 32 months as BP shareholders. To date, we are sitting on a small paper profit of 11.8% of our initial investment. That’s not a great return for taking the risk of investing in a fossil fuel business. That said, patiently reinvesting our dividends for nearly three years has boosted our returns.
In summary, buying BP shares has largely done what I anticipated. It has delivered market-beating income, while providing a useful hedge against higher energy bills. Nevertheless, this stock has been much more volatile than I’d hoped, as the oil price has bounced up and down since mid-2023.
Finally, I expect energy stocks to remain highly volatile until a lasting truce emerges in the US/Israel-Iran war. If a permanent ceasefire is agreed, then oil prices — and the BP share price — could sink once again. Furthermore, BP still faces the ultimate challenge of moving away from fossil fuels to renewable energy, which will be no easy task!
