"The world's 10 biggest dividend payers handed out a collective $40.36 billion (Â£30.27 billion) in the first quarter of 2018, up from $37.42 billion in the previous year, according to Janus Henderson's Global Dividend Index.However, despite the ..."
Thanks for posting, an interesting perspective. I guess short term BLT may do well if they can offload their shale at a good price, timing is good (not sure if that was good planning or good luck as PoO has moved up since the plan was announced). It looks like there is a fair bit of interest, including from the majors so should go well.
It doesn't sound like there is much more to it other than additional asset sales which doesn't help forward earnings. I suspect any attempt to do an OPEC on Iron Ore would be undermined by competitors (who's core skill is after all undermining).
The challenge to dual listing seems like a risk to BHP.
I have been slicing BLT into the rise (also RIO at a slower rate), now hold but a few BLT and a moderate chunk of RIO. Would be tempted to buy back both if SP dipped.
PS enjoyed the link in your piece which opened a new BLT post, that had me scratching my head.
(Sharecast News) - Barclays analysts upgraded BHP Billiton's rating to 'overweight' on Friday and reduced that of Rio Tinto to 'equal weight', citing an expectation that BHP will close ground on Rio Tinto following five years of underperformance.
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In a research note sent to clients, Barclays said the driving factor is the projected monetisation of BHP's US shale acreage, with potential upside depending on valuations attributed to the Permian Basin acreage in particular.
With oil prices and shale valuations were on the rise, powered by recent changes to the US tax code, they saw scope for the company to return between $7.8bn and $11.1bn in cash proceeds to shareholders as a result.
The analysts forecast those sales had the potential to add between 7% and 9% to the company's yield and to provide a boost to returns on equity.
Elsewhere, analysts said that a "more aggressive" approach to addressing equity underperformance was potentially possible.
"Additional non-core asset sales are one option. We see $9.5bn (8% of market cap) of potential proceeds based on NPV, equivalent to 'a second shale' in terms of both quantum and potential impact on ROE. Assets include Cerro Colorado, Nickel West, UK & Algeria petroleum, Samarco, Cerrejon and Mt Arthur," they said.
They also suggested that the company could ration commodity supply of iron ore, as Rio Tinto has successfully done with iron ore, because the company holds a large enough market share to move the price.
"We believe the various catalysts outlined above offer a credible pathway to materially improve returns on capital and underpin a meaningful step-up in shareholder returns, which in turn should set BHP up to regain its premium rating," they explained.
Barclays also boosted BHP's target price to 1,800p per share from 1,600p
I would think that the only way this might cause impact is if global economic growth is hit by a trade war and it turns out not to be "good and easy to win", shades of "whoever knew healthcare could be so difficult!"
US is a small net iron ore exporter, presumably that might turn around if US steel benefits, but short of a hit to global production that export will be filled by other sources , so little impact. If Trump follows through on his infrastructure promises that should help with demand, but Belt and Road will probably be a much bigger driver and we can only Hope that the Trump Infrastructure promises are not just more white lies.
Trump imposing a tariff on steel imports is at first glance very negative here. On the face of it the US steel industry should benefit, in the short term at least. But if US car manufacturers have to pay more for the steel they need to build cars then those cars become more expensive for US consumers and cars being exported become less competitive. The result, presumably, is contracting US car manufacturing. Something tells me this tariff hasn't been well thought through...
Results - fair to middling. Dividend uplift is good. Net debt down. Productivity down but expected - longer term (2yrs) anticipated significant improvement. Very saddened by the two deaths. I hope financially at least, the company looks after the families. I also hope safety procedures will genuinely be improved and the statement isn't just lip service. No one should lose their life at work.
"What will 2018 hold for the banks? Justin Urquhart Stewart talks share tips, favourite sectors, passive versus active funds and where he thinks the FTSE 100 will end next year.Which sector are you backing for 2018?I think 2017 gives me an ..."
No, there are plans to dispose of onshore US assets only as announced in recent results
"US assets are non-core and options to exit these assets are being actively pursued...but will only divest for value. Execution of these options may take time... the sale of a portion of Hawkville is progressing and is anticipated to be executed in the September 2017 quarter."
Oil/Gas contributed around 20% of total Group EBITDA, the US onshore assets around 25% of petroleum, ie 5% of group. Other oil assets in Australia, US Gulf coast, Trinidad and Algeria are not for sale.
Rising oil price will naturally help but I would think that the rise in metals prices will be a much bigger contributor to BHP and have driven SP to double from Jan 2016 trough, many commentators are indicating it has further to go but BHP is not the preferred holding in the sector. I hold a few BHP but have more RIO which I think is a better run business and does not have the uncertainty of claims for the Samarco disaster or the possible change in the dual listing structure.
With the current oil price, and where it's heading, it may be Elliot will be proved wrong. Currently WTI is 30% above BHP's breakeven price ($44) on the Delaware acreage so future profits from oil could be substantial.
Per my last post of Dec 2014 I have found the price differential between London & Sydney has persisted so can only attribute it to the franking tax credit that makes the Australian shares more attractive as long as BHP pays decent dividends. The tax asymmetry of the dual listing is one of the factors Elliot have since been agitating over.
I sold out of BHP back in 2014 & 2015 at an unexpected short-term gain and glad I did in hindsight.
The management team seem unable to allocate capital profitably, yet thankfully the world needs their minerals so they end up making money in spite of themselves. At least by simplifying the business in 2016 they have reduced their scope for future error.
MacKenzie doesnt have a great track record in the intervening years from what I can see with returns declining, dividend slashed and Samarco also happened on his watch. OK maybe some of that was bad luck. But over a near five year period shouldnt there also be some counter-acting reversion to mean good luck? I cant see it.
Not tempted to buy back in at this price of GBP13.50/AUD26.50.
"A bunch of FTSE 100 big hitters publish updates over the next few days. Will it be enough to keep the index heading north?Monday 16 OctoberTrading StatementsEtalon, Schroders, Rio TintoAGM/EGMZibao Metals Recycling, Bluejay MiningTuesday 17 ..."
I agree with you which is why I have more invested in RIO 3.76% than BLT 1.30%.
Since I moved BLT to my ISA on 10 Jul SP has gone up 8%. RIO in same period only gone up 3%. GLEN (which is 2.16% of my total value) went up 16.5% (recovery phase). In medium term I think BLT is a bit better value than RIO. RIO is more fully valued based on Price / NAV and Price / FCF. I am thinking of topping up on BLT but I think RIO is too expensive to top up now.
I wouldn't castigate you, m8, but I think RIO is a better bet than BLT.
It's a simpler biznay and, while RIO has had its fair share of clusterfucks (Alcan, Mozambique coal) BLT has had worse and more recent ones (USA shale,Samarco and Jansen). With Jansen they've dug themselves into a hole ... and are keeping on digging.
I moved my modest holding of BLT into my ISA on 10 July and at the beginning of this month they were showing fastest CG in terms of AER (192% pa) in my portfolio. Even outperforming ABF (1 Sep AER 102%). Since then SP has fallen off about 8%. I believe because of weakening dollar and metal prices, At current SP I think BLT are a strong buy for income as well as CG..
Valuation: Forecast (fc) PE 12.6, price / FCF 9.1 (3 yr average 26.5) so does not look expensive.
fc EPS growth 20.6%
FCF conversion 166% (this shows plenty of cash for dividends or purchases)
fc dividend yield 4.9%, fc cover X1.6
ROCE 11.2% not great but OK
Based on restoration to mean I am almost certain SP will rise 5% or more in the next month or so. Please castigate me if I'm wrong :-)
Investment fund manager Jobs Curtis says that in the year to June it reduced its debts by 37% and is generating significant amounts of excess cash at current levels of commodity prices.
This should reflect in dividends he says at the current share price is 4.6%. Although Iron is 44% of profits, copper is 17% (lots wanted for EV's) and Oil 20% but is selling its shale investments which he thinks is a good thing and if you want to invest in oil then BP would be a better bet.
The sell off of shale he puts down to Elliott's arrival on the register which will be good for investors.
"The new guy will cut Jansen dead in all likelihood."
I sincerely hope so, for shareholders' sake [of which I am no longer one] but I fear that the temptation may be great to say "We've sunk a helluva lot of money into Jansen already so why don't we just finish it off?"
"Having spent big money in the hope of riding the expected boom in shale, LSE:BLT:BHP Billiton bowed to pressure from shareholders Tuesday and pledged to exit its now underperforming US shale oil and gas business.The Anglo-Australian miner is ..."
"With a later market window now anticipated, the Jansen project will not be brought to the Board in the 2018 calendar year."
No wonder Elliott are pursuing these chumps over Jansen (and US onshore shale and oil in general). What kind of control is the Board exercising over Jansen if BLT manages to chew its way through $2 billion of shareholders' money ... plus another $300 million to come in 2018 ... without "bringing the project to the Board"? What ARE these "Board" guys doing all day?
Clearly a decision has been taken that the new chairman is going to push through whatever decision is taken as regards Jansen. Fingers crossed that they cancel the whole sorry-assed munter of a project. It'll be a lot easier for the new guy to do that; it's soooo hard for the existing mob to put their hands up and admit: "We screwed up .... big time ... what WERE we thinking?"
Whatever they do it won't affect
LKH on the flybridge who has sold out of BLT and put all his mining chips on RIO
Results look pretty good, albeit earnings/EPS behind some forecasts, but then debt at $16.3b is below forecast.
"Onshore US assets are non-core and we are actively pursuing options to exit these assets for value" seems like a fire-sale planned to close that particular stable door.
Samarco dam failure- "The final date for negotiation of a settlement has been extended from 30 June 2017 to 30 October 2017" Always seemed an optimistic target, hopefully the Brazilians aren't reading the results and penciling in another zero on their target settlement number.
I note most forecasts are for slight declines in earnings in 18 & 19, I suspect because there are to many variables in the mix for the analysts to stick their necks out. In any case it seems worth holding a few of these along with a bigger holding of RIO and some CEY in case things turn ugly and comes back into fashion.
"One of the things that Elliott wants BLT to do is to deep six the Jansen potash project. If Elliott gets its way I for one will give three hearty cheers"
I'd in join the cheering for that, but not so sure about changing the dual listing to Aus only, seems an unnecessary risk to make BHP more complicated and presumably expensive to own to many existing shareholders, including H2 who would offload remaining holding sharpish and swap to RIO. RIO is already a much bigger holding and seems an altogether steadier ship with clearer idea of what business it should be in. That said, both have done pretty well of late the dark days of 2015 but a distant memory.
"as it attempts to head off the activist hedge fund Elliott Advisors"
One of the things that Elliott wants BLT to do is to deep six the Jansen potash project. If Elliott gets its way I for one will give three hearty cheers ... albeit from the sidelines as I'm now entirely out of BLT (and South32) in favour of Rio Tinto.
It seems quite extraordinary that BLT continues to pour huge lumps of money down that vast hole in the ground in Saskatchewan without being certain that they are actually going to bring it on stream in a timely fashion. Their attitude looks like unforgiveable dithering to
BHP Billiton is poised to unveil a bumper $4bn (£3.1bn) dividend as it attempts to head off the activist hedge fund Elliott Advisors, which has been running an aggressive campaign to overhaul its strategy and boost returns to shareholders.
The mining giant is on track to post a dividend of 84 US cents (65p) a share when it reports its full-year results late on Monday night in Australia. Its earnings before interest, tax, depreciation and amortisation are expected to be in the range of $20bn (£15.5bn), up from $12bn (£9.3bn) a year ago.
But Elliott have not sold. 5% holding now and just shaking things up for the future.
Since Elliott initiated a public conversation on BHPs performance and opportunities to create value for all shareholders, BHP appears to have taken steps toward a smarter, more value-generative way of conducting business, and we support and encourage continued progress.
"Global dividends rose to $218.7 billion (Â£169.7 billion) in the first quarter, expanding at a rate of 5.4% year-on-year, according to the latest Global Dividend Index from Janus Henderson.This is the fastest underlying increase in global dividend ..."
A month on and the do nothing option worked. As soon as someone predicts a rise or fall turkeys rush in and either sell at bottom or buy at top. It seems that as soon as something is recommended the average punter MUST react too late.
Contrarian would seem the best advice.
I have developed my own algorithms and in the last month my recent buys have gained more than my existing holdings. What I have not attempted yet is to work on selling algorithms though I have an idea for one where the value has doubled and the yield dropped below my target.
This is an excellent move, my humble. Shell used to own Billiton and it was an absolutely rubbish company, so any BHP move to kill off the name has my ardent support.
Anyway, the old Billiton assets disappeared outwith BHP when they demerged them into South32 of which I now have such a small holding that I can't be arsed to get rid of it, much though I would like to.
It seems a silly waste of time to keep the name BHP Billiton but to use "BHP" as the sole brand. I know that it would require a shareholder vote to convert the corporate name to BHP but I feel that they should do that. Don't spoil the ship for a pennyworth of tar!
"BHP Billiton is dropping 'Billiton' from its name in a move to simplify its corporate structure and return to its founding roots in Australia more than a century ago. Dropping the name Billiton will see the multi-commodity miner be simply known as BHP, returning to its Australian roots when it was known as Broken Hill Proprietary Co Ltd. BHP, which has operations in 25 countries, will retain its dual listings in Australia and London."
I've always found it slightly confusing that EPIC code is BLT and not BHP. There is no such EPIC code as BHP so its not as if already use.
I traded these quite profitably 11/12 years ago when they were around £8-9 mark. Now
they seem to be bumping along the bottom but eventually there will be an upswing in the cycle
and because of its size and diversity BHP will rise to new heights eventually. so just hang
on in there and keep topping up and taking the divs I say.
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