Milestone for BP with first dividend rise since spill

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The 1 cent increase to 8 cents (5.1p) a share is the first time BP has raised its dividend since it was reinstated a year ago following a six-month suspension as it struggled with the financial fallout from the Gulf of Mexico spill.

However, even with the hike, BP's dividend is barely half what it was at its peak before the spill in April 2010, when BP payouts accounted for£1 of every £6 of dividends paid to UK pension funds.

The dividend increase came as BP unveiled annual results which, it claimed, put it "back on the right path" following a string of disappointments including the oil spill and a failed tie-up in the Russian Arctic.

BP reported a profit of $25.7 billion for 2011, compared with a $3.7 billion loss the previous year. For the fourth quarter, BP reported a 38% jump in profit to $7.6 billion. Chief executive Bob Dudley said: "2012 will be a year of increasing investment and milestones as we build on the foundations laid last year."

BP disappointed some of its big shareholders by not announcing any further settlements relating to claims stemming from the oil spill. The company also said it had raised its estimate for the total cost of the spill by $1.8 billion to $43 billion in 2011, reflecting an expected rise in the costs of cleaning up the shore, plus a new $500 million charge for legal costs in 2012.

The company is preparing for a major trial in New Orleans at the end of the month to determine liability for the oil spill, although Dudley said he was still hopeful that a settlement could be reached with the US Department of Justice.

"As I have said before, we are prepared to settle if we can do so on fair and reasonable terms, but equally, if this is not possible, we are preparing vigorously for trial," he said.