BHP Billiton shares fall as doubts grow over dividend policy
By James Regan and Sonali Paul
SYDNEY/MELBOURNE Nov 13 (Reuters) - BHP Billiton shares struck a seven-year low on Friday, their weakest since the global financial crisis, on mounting concerns it may ditch a policy of paying ever higher dividends.
The world's biggest mining company has been hammered by sinking commodity prices, a situation made worse by last week's Samarco mine tragedy in Brazil, where millions of dollars in fines and penalties are beginning to emerge.
BHP stock tumbled more than 3 percent to A$19.81 in early trading, more than double the fall in the broader S&P/ASX 200 , and was on track to fall more than 11 percent for the week, it's biggest weekly fall since 2008.
BHP has been upping its dividend payout annually under a "progressive" dividend policy that's endeared the company to investors.
However, mining analysts are speculating this could soon come to an end as market forces and unexpected costs start to overwhelm the balance sheet.
"We've been bemused for some time at the lack of share price depreciation in light of the deteriorating earnings profile for the group and we've been skeptical for many months about the dividend policy of the company, " said Ben Lyons, a portfolio manager at ATI Asset Management.
"It's interesting to see how things have played out reasonably rapidly. Brazil was certainly one of the major catalysts," said Lyons, whose firm holds an underweight position in BHP shares.
Goldman Sachs this week said BHP needed to cut its dividend in half to get it down to a sustainable level. Continuación...