BP (LSE: BP) shares have had their ups and downs lately but overall, they’ve done pretty well. Possibly even better than people realise.

Back in August 2021, the BP share price stood at 305p. Today, it’s around 528p. That’s an increase of around 73%, which would be a pretty solid return on its own. In practice, investors in the FTSE 100 oil and gas giant have done a lot better than that.

BP shares have been lifted by higher oil and gas prices, stronger refining and trading profits, and a renewed focus on its core energy businesses. On 4 August, the board reported a stunning 143% jump in Q2 underlying replacement-cost profit to $5.73bn.

Why is this FTSE 100 energy giant thriving?

Yet BP has had its fair share of problems. Its green transition backfired. Now it’s selling or winding down some of those low-carbon investments to direct more money into oil and gas.

The boardroom has also been turbulent. With luck, things will settle under new CEO Meg O’Neill, who took over in April. But with former chair Albert Manifold considering legal action following his abrupt firing in May 2026, we can’t say that for sure.

O’Neill must also overhaul a company that needs to simplify its sprawling portfolio and strengthen its balance sheet, with net debt still north of $22bn.

Three reasons I’d consider BP shares today:

• The valuation looks cheap compared with many FTSE 100 companies, and the dividend is generous.
• The Iran war has driven up energy prices and revenues. With no resolution in sight, they could stay high.
• BP is selling assets and cutting debt while concentrating on its most profitable operations.

There are three obvious risks too:

• Profits remain heavily dependent on oil and gas prices, which are volatile and unpredictable.
• The energy transition could squeeze the value of fossil fuel assets over time.
• BP’s strategy has changed repeatedly, which doesn’t inspire confidence.

See how the dividend makes a difference

Let’s say an investor put £5,000 into BP shares five years ago. At 305p, they’d have bought 1,639 shares. Today, they’re worth about £8,650. But that’s only part of the story.

BP has also paid substantial dividends. Reinvesting those payouts would have bought additional shares, which would then have generated dividends themselves.

I reckon that £5k would be almost £10,000 today, with dividends reinvested. The exact number depends on the prevailing price each time the dividend was reinvested. Either way, it’s still pretty good.

BP still faces plenty of challenges. Iran is the most obvious one. Climate change and the rise of renewable energy pose a longer-term threat. As the planet warms, some investors won’t want a fossil fuel company in their portfolio.

Yet the shares look reasonably value, with a forward price-to-earnings ratio of 7.4. The expected yield is roughly 4.7% this year and 4.9% in 2027.

I think that makes BP worth considering as part of a balanced portfolio for investors seeking income and diversification, who can withstand the short-term volatility.

Should you invest £5,000 in Bp P.l.c. right now?

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Harvey Jones owns shares in BP.