Polliesdividend

BHP Biliton slashes its dividend by 74%

Begin this week BHP stated a recording a $5.67 billion first-half loss due to a massive write down of U.S. energy assets.

BHP -the world’s largest mining company by market value- had to react to the new market reality by slashing its midyear dividend by 74% to 16 cents a share. Furthermore BHP will reduce capital expenditure by $US3.5 billion in the next 18 months, cutting spending to $US7.0 billion in the 2015/16 and to $US5.0 billion by 2016/17.

BHP Chief Executive Andrew Mackenzie said it would offer shareholders at least 50% of underlying profits each fiscal half “to help BHP Billiton manage volatility.” He said the move would safeguard its balance sheet during what it expects will be a “prolonged” period of low commodity prices.

BHP’s low-cost assets, highest credit rating in the sector, and continued free cash flow generation are strengths, but they simply weren’t enough to combat the severe crash in commodity prices over the last year.

The new dividend policy effectively reduces BHP’s dividend yield from 9.8% to an estimated 1.3%. It is BHP’s first dividend cut in 15 years, but is still hurts.

If we look closer what the CEO said, it is clear that BHP’s new dividend policy will result in a minimum payout of $0.04 per share (paid twice per year), and the company’s Board of Directors is also providing an additional $0.12 per share during the current semi-annual period (the Board can continue providing extra dividend payments at its discretion).

Okay the dividend cut was not a surprise. All alarm bells and other signs were flashing the last couple of months. Because BBL takes just 2% of my Vrijheid Fonds, I decided not to act before the new financial numbers.

My Vrijheid Fonds consist of 30 shares of BBL. My total dividend loss for 2016, due to the BHP dividend slash, is approx.€ 50.

In the next few months I will do a new evaluation of BBL for my Vrijheid Fonds.

Do you own BHP of BBL? What is your action after the dividend slash?
I like to hear from you.
Cheers,

Pollie

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9 thoughts on “BHP Biliton slashes its dividend by 74%

  1. seekingreturns

    Been watching it, but never bought it. I think the writing was on the wall after the dam accident. I’ll continue to wait until I see a sustained uptick in commodity prices. Looks like BX rescued Arrium today as well. Good Luck.

  2. ambertreeleaves

    The story is quite similar to KMI I suppose? Would this then be a good moment to enter a position in the stock? When the oil and commodities finally recover, it could then have the potential to go up in price and increase the dividend again.
    Or is there a more fundamental issue?

  3. Special Agent Dividend

    I own the BBL version and I hated to see the cut. BBL, by far, is my worst performing stock overall and now this cut adds to my dismal history with it. But, I’ll ride it out for awhile to see what happens, as I don’t really want to ‘realize’ the loss just yet. I’m in it for the long haul so no need to rush for me.

  4. Dividend Diplomats

    PD,

    Obviously it sucks! But that’s I guess what diversifying your portfolio is about, eh? So you don’t feel the pain as much, obviously. I also wrote on this and it just sucks. haha, it will be better for business. Long roads ahead, eh?

    -Lanny

  5. Dividend Beginner

    Hey Pollies,

    Really sorry to hear that man, that’s a pretty significant cut here, but many dividends are being cut. Crazy how they have a cut after 15 years, eh? Guess commodities aren’t as resilient when it comes to holding streaks. Do you know the percentage the cut shaved off your annual income? Keep going strong!

    DB

    1. Polliesdividend Post author

      Hello DB,

      Thanks for stopping by and taking the time to write a comment. Unfortunately it is part of the game. But I really dislike it!
      Just 2% of my projected income for 206 has been shaved off by this cut.

      At this moment I ‘m reassessing my ownership of BBL.
      For the moment I will keep BBL in my Vrijheid Fonds.

      Cheers,

      Pollie

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