BP aims to improve City relations with 14 per cent dividend rise

BP's chief executive, Bob Dudley, is expected to increase the oil giant's dividend for the first time since it was reinstated for the end of 2010 after a six-month suspension.

Analysts expect BP to increase its quarterly payout to investors by 1 cent to 8 cents a share when it announces its fourth-quarter results on Tuesday, as Mr Dudley seeks to rebuild relations with the City. This would be barely half the amount BP was paying out before the Gulf of Mexico oil spill, but it is not expected to be its final dividend increase. At its peak, before the spill, BP was the UK's biggest dividend payer, accounting for £1 in every £6 of dividends paid to UK pension funds.

Kim Fustier, an analyst at Credit Suisse, said: "BP should be able to raise its dividend in February [to 8 cents]. However, we see risks that management might wait for a full Macondo resolution [relating to the oil spill] later in 2012 before raising the dividend more substantially."

BP will announce a pre-tax profit of $7.260bn (£4.6bn) for the fourth quarter of 2011 – a jump of 9 per cent on the period a year earlier – according to Deutsche Bank.

This week, a US judge ruled that BP must cover all compensatory damages claims relating to the role played by Halliburton, the group responsible for the cement casing of the failed well.