BP (BP) stock has declined slightly over the last 3 months while the S&P 500 as a whole as gained 5.6%. As a result, the stock appears attractively valued and is now offering a 5.5% dividend yield.

BP is headquartered in the United Kingdom, making it an international stock.  If it were a US based company, it would be among the highest yielding members of the S&P 500.  As a European stock, however, BP is not a member of the S&P 500.

While most American investors do not have this European oil major on their radar, they are likely to be well served if they purchase it at its current price.

There are three reasons that the vast majority of American investors stays away from BP. First of all, most investors are more familiar with the domestic oil majors, Exxon Mobil (XOM) and Chevron (CVX), and thus they prefer these stocks. In addition, these two companies have exceptional dividend growth records, as they have raised their dividends for more than 30 consecutive years. These records are in sharp contrast to that of BP, which was forced to suspend its dividend after its major accident in the Gulf of Mexico, in 2010.

That accident is another reason for the aversion of domestic investors to the European oil giant. That accident, which is the worst in the history of the oil sector, has cost BP about $62 B so far. This amount is obviously excessive, particularly if one notes that the oil major has posted earnings of $7.0 B in the last 12 months. Another consequence of that accident was the unprecedented scale of asset sales, which BP implemented in order to pay for its liabilities. Due to those asset sales, the oil production of BP decreased approximately 25%, from about 4.0 M barrels/day to 3.0 M barrels/day.

When BP began to somewhat recover from the disaster in Macondo, it faced another strong headwind, namely the plunge of the oil price that began in 2014. However, investors should realize that the company has finally entered a sustained recovery phase. Due to the production cuts of OPEC and Russia, the oil market has become much tighter lately and hence the oil price has enjoyed a strong rally in the last 12 months. Thus it is now trading near a 3.5-year high.