Dividends in Metals & Mining Stocks– BHP, S32, FMG, RSG, EVN

The global price of gold has reached an all-time high, as the US and China trade war is expected to accelerate with the announcement of the new tariff. US President Donald Trump had recently, notified on an additional duty of 5% on $550 billion on Chinese products. This has been done after some hours after China had put the retaliatory tariffs on $75 billion worth of US goods, as it has put an additional 5-10% tariffs on imported US goods from 1 September 2019. This has raised the fear of recession and the global economic growth slowdown in the global economy. On the other hand, due to US and China trade war, the base metals price is falling.  

Let’s now glance at the updates on the stocks to understand them better.

BHP Group Ltd

Final dividend of 78 US cents per share for FY19: Melbourne based, BHP Group Ltd (ASX: BHP) is known as the leading resources entity in the world and is into extraction and processing of minerals, oil and so forth. The stock of the company has given a return of -7.88% in the last three months with a P/E multiple of 15.290x. BHP’s stock was trading on 28 August 2019 at A$35.26, marginally up by 0.887 percent (at AEST 12:44 PM). Its annual dividend yield was recorded at 5.52%.

On 20 August 2019, in the full-year report closed on 30 June 2019, BHP had notified on the distribution of the final dividend of US 78 cents/share (100 percent franked) which is an increase of 24%. This also includes an additional amount of 25 US cents per share of the aggregate amount of US$1.3 billion, which is above the company’s 50% minimum payout policy.

The company had already declared the total ordinary dividends of USD 1.33 per share amounting to USD 6.7 billion. This was equal to a 74 percent payout ratio. The company has concluded its onshore US sales procedure, and net proceeds of it amounted to USD 10.4 billion, which have been given back to shareholders via a blend of an off-market buy-back at A$27.64/share and a special dividend of USD 1.02/share. For FY19 period, the company’s underlying return on capital employed, excluding the Onshore US assets, stood at 18 percent.

FY19 Financial Performance (Source: Company’s Report)

South32 Limited

Expanded the capital management program: South32 Limited (ASX: S32) is an internationally diversified metals and mining entity that generates bauxite, alumina, manganese, nickel, silver, lead and such metals in the Australian, South African and South American regions of the world. The stock of the company has given a return of -29.19% in the last three months with a P/E multiple of 22.310x. S32’s stock was trading on 28 August 2019 at A$2.485, climbing up by 1.429 (at AEST 12:40 PM). Its annual dividend yield was recorded at 4.62%.

On 22 August 2019, S32 released annual report for the period ending on 30 June 2019, wherein it mentioned that it would be paying a final dividend of US 2.8 cents on 10 October 2019. S32, at the end of FY19, had a net cash balance of US$504M and had returned US$762M to shareholders during the period. In FY19, the company had paid a 100 percent franked interim dividend of USD 256M and declared the final ordinary dividend of US$140M as per the company’s dividend policy, which would give back at least 40 percent of Underlying earnings in each of the six-month duration.

Also, the company has repaid USD 366M to shareholders, in accordance, with the capital management program, with amalgamation of on-market share buy-back program of USD 281M and special dividend of USD 85M. Moreover, the company has broadened its capital management program by USD 250M to USD 1.25B and expects to pay back USD 264M by 4 September next year.

Capital management program (Source: Company’s Report)

Fortescue Metals Group Limited

Strong Performance in FY19 with 396% increase in the fully franked dividend per share: Fortescue Metals Group Limited (ASX: FMG) is an international leader in the iron ore sector and was formed in 2003. It has unearthed and advanced significant iron ore deposits and has also built a few major mines worldwide. The stock of the company has given a return of -10.65% in the last three months and has a P/E multiple of 5.140x. FMG’s stock was trading on 28 August 2019 at A$7.505, sliding down by 0.596 (at AEST 12:36 PM). Its annual dividend yield was recorded at 5.7%.

On 26 August 2019, FMG had published results for FY 19 period and had reported 45% growth in the revenue to $9,965 million, along with 263% increase in the reported net profit after tax to $3,187 million and 195% rise in the underlying net profit after tax. In FY 19, there has been a 396% increase in the fully franked dividend per share to A$1.14 compared to A$0.23 in FY 18. This also represents a 78% payout ratio of FY19 NPAT. The company has declared a 100 percent franked final dividend of AUD 0.24/share, payable on 2 October 2019. Besides, at the end of 30 June 2019, the company’s cash in hand stood at $1,874 million.

Resolute Mining Limite

FY19 Production Guidance: Resolute Mining Limited (ASX: RSG) has above three decades of experience, since it has been involved with exploration, development and operations of gold mines based in Australian and African region, that have generated beyond 8Moz of gold. The stock of the company has given a return of 48.67 percent in the last three months with a P/E multiple of 42.420x. RSG’s stock was trading on 28 August 2019 at A$1.72, moving up by 2.381 percent (at AEST 12:33 PM). Its annual dividend yield was recorded at 1.19% and as per its declaration on 23 August 2018, RSG has paid final dividend of 2 cents for FY18 period on 12 October 2018.

On the other hand, as per the presentation on Resolute’s Acquisition of Toro Gold released on 31 July 2019, RSG has acquired about 94% of Toro Gold as the company has confirmed its first completion. The company is acquiring Toro Gold for US$274 million, which will comprise of cash of US$130 million and 142.5 million RSG shares. Moreover, for FY19, the company is expected to produce 400,000oz of gold at an AISC of US$960/oz that also includes the production from Mako from the acquisition.

For FY19, the company expects Gold production from Syama is expected to be 270,000oz at US$890/oz, and Gold production from Ravenswood is expected to be 60,000oz at an AISC of US$1,270/oz.

Evolution Mining Ltd

Subdued Performance in FY19: Evolution Mining Ltd (ASX: EVN) is engaged with the exploration, development and operations of mine, selling of gold and such work. The stock of the company has given a return of 37.13 percent in the last three months with a P/E multiple of 39.350x. EVN’s stock was trading on 28 August 2019 at A$5.24, edging up by 3.557 (at AEST 12:05 PM). Its annual dividend yield was recorded at 1.88%. On the other hand, the company has an annual dividend yield of 1.88%.

The company released FY19 results on 15 August 2019 and declared that it would be paying a fully franked dividend per share of 6 cents on 27 September 2019. This will of an aggregate amount of A$101.8 million and is based on EVN’s new dividend policy of a payout ratio of 50% of the company’s free cash flow.

Overall, in FY19, the company has declared the total dividend of A$1.14/share, which represents a 78% payout ratio of NPAT.  The company for FY 19 has reported a 17% decline in the net profit after tax to A$218.2 million and 13% fall in the Underlying profit after tax to A$218.2 million.

During FY19, the company’s revenue fell by 2% to A$1,509.8 million on the back of 6% decline in gold production to 753,001 oz. However, the company achieved a 7% higher gold price to and lower copper and silver revenue were driven by lower both volume and price.

On the outlook front, for the fiscal year 2020, the company expects to produce gold in the range of 725,000 – 775,000 ounces at an All-in Sustaining Cost expected to be in the range of A$890 – A$940 per ounce.

Dividends (Source: Company’s Report)


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