You are here: Home - Investing - Experienced Investor - News -

Miners could follow Anglo American dividend cut

Written by:
Mining giant Anglo American’s decision to scrap its 2016 dividend could be the beginning of a worrying trend for miners, according to one market analyst.

Shares in Anglo American fell by as much as 8% in early trading today after the firm announced it was suspending its dividend to investors as part of cost savings plans as it deals with weakening commodity prices.

The news drove down share prices of fellow miners Glencore, Antofagasta, Rio Tinto and BHP Billiton.

Joshua Mahony, market analyst at IG, said: “The attractiveness of owning oil or mining shares has been questionable of late and with the prospect of dividends also being scrapped, the sector is fast running out of reasons to invest.

“The sell-off seen across FTSE commodities stocks highlights the flock to dividend safety with Anglo American likely to be the first of many firms sacrificing its dividend.”

Sharing his view, Russ Mould, investment director at AJ Bell, added: “A plunge in the Bloomberg Commodity index to a sixteen-year low helps to explain Anglo American’s decision today to cancel any dividend payments in 2016, a move which in turn piles the pressure on BHP Billiton and Rio Tinto to reassess their shareholder payouts.

“Analyst forecasts suggest BHP Billiton will offer a yield of more than 10% for 2016 and Rio Tinto more than 7%. Both look to be at risk in the current commodity price environment, especially as BHP’s forecast 2016 profits provide dividend cover of just 0.4 times and Rio’s one times.

Meanwhile, Mahony said evidence of the relative stability of the US jobs market has been highlighted once more today, with the US JOLTS report indicating that job openings, hires and separations were largely stable.

He said: “The JOLTS report is rumoured to be Janet Yellen’s favourite labour market measure and with such stability confirming a robust jobs report last week, a December rate rise seems more likely than ever.”

Why a US rate rise is no cause for panic


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Naming and shaming banks – will it really get savers switching?

Savings accounts paying paltry rates of interest will be named and shamed by the City watchdog but will this new...