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Are these ASX 200 miners topping the dividend charts: Fortescue, BHP Group, Rio Tinto?

  • September 09, 2020 05:44 PM AEST
  • Kunal Sawhney
    CEO Kunal Sawhney
    2226 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Are these ASX 200 miners topping the dividend charts: Fortescue, BHP Group, Rio Tinto?

Summary

  • During the pandemic, prices of few commodities, especially iron ores and gold touched record highs, leading to the increased bottom line and better dividend announcement for many companies.
  • With a 49% jump in net profit after tax (NPAT) and a strong balance sheet, Fortescue declared A$1.76 per share as FY20 total dividends, representing a 54% increase over FY19 dividend payout.
  • With earnings from most of its segments down, BHP Group had cut down its final dividend payment by 29.5%.
  • Rio Tinto declared an interim ordinary dividend of US$2.5 billion, demonstrating an interim payout ratio of 53% of H1 underlying earnings.
Gold MTF non-AMP

The impact of COVID-19 pandemic on the metals and mining sector has been limited with operations continued for most of the companies despite lockdown. Furthermore, prices of few commodities, especially iron ores and gold touched record highs during the period.

Many companies experienced increased revenues and net profits due to higher prices that have added a significant amount of cashflows and have led to the announcement of high dividend payouts.

However, many companies also declared dividends or have paid final dividends by adding net debt to their balance sheet.

Interesting Read: Iron Ore Exporters and Stock Price Race: FMG, BHP, RIO

In this article, we will be discussing dividend payouts of three ASX listed metals and mining kingpins.

Fortescue declared A$1.76/share as FY20 total dividend, up 54% over FY19 dividend payout

With a 49% jump in underlying net profit after tax (NPAT) and a strong balance sheet, Fortescue Metals Group Ltd (ASX:FMG) declared fully franked final dividend of A$1.00 per share robust, along with an interim dividend of 76 cents per share, totalling to A$1.76 per share as FY20 total dividends, representing 54% increase over FY19 dividend payout and 77% payout ratio of FY20 NPAT.

77% payout ratio is in line with the Company’s dividend policy of a payout ratio of 50% to 80% full-year net profit after tax. The total value of FY20 dividend stands at A$5.4 billion. The dividend is expected to be paid on 2 October 2020 to shareholders.

FMG FY20 results, dated 24 August 2020

For 12 months financial results ending 30 June 2020 (FY20), Fortescue recorded a 29% increase in revenue to reach US$12,820 million, backed by 177.2 million wet metric tonnes of ore sold priced at average realised price of US$78.62/dmt.

Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) jumped 38% to US$8.4 billion and net profit after tax jumped by 49% to US$4.7 billion, and earnings per share of US$1.54 (A$2.29).

According to the Company, the strong business performance is backed by successful incorporation of its strategy for integrated operations and marketing and strong customer demand.

The Company recorded cash on hand of US$4.9 billion at 30 June 2020. Net cashflow from operating activities was US$6.4 billion, with US$2.0 billion invested as capital expenditure. Net debt of US$258 million was recorded at 30 June 2020, demonstrating a huge reduction of US$1.8 billion from FY19.

The Company highlighted that the balance sheet reflected its capability to support ongoing operations and the capacity to fund future growth.

On 9 September 2020, Fortescue share price was at A$18.03 per share, with a decrease of 2.541% from its last close. Also, the annual dividend yield was recorded at 9.51%.

Also Read: Fortescue Leaps Toward Green Industrial Operations, Signs DoA With PNG Government

BHP Declared Dividend, 10% down for the Year

BHP Group Limited (ASX:BHP) cut down its final fully franked dividend payment by 29.5% to US 55 cents per share, demonstrating 72% payout, to be paid by 22 September 2020.

The final dividend payment includes an additional amount of 17 US cents per share, which is above the 50% minimum payout policy. Total dividends of US$1.20 per share was announced, which is equivalent to a 67% payout ratio. The Company’s total dividend value for FY20 was US$6.1 billion.

The company’s balance sheet reflects a net debt of US$12.0 billion at 30 June 2020, higher compared to US$9.4 billion on 30 June 2019. The increase in net debt reflects record ordinary dividends paid to shareholders during the year.

Income statement figures for the financial year ended 30 June 2020 had been moderate.

Total revenue decreased by ~5% to US$ 42.93 billion with a Profit after taxation attributable to the members at US$ 7.96 billion, down 4% from the previous year.

BHP released underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) at US$22.1 billion, representing an underlying EBITDA margin of 53% for FY20.

Earnings from most of its segments were down. Attributable profit was recorded at US$8 billion for the year while profit from operations was at US$14.4 billion.

Net operating cash flow for FY20 was at US$15.7 billion, with a free cash flow of US$8.1 billion

On 9 September 2020, BHP Group’s share price was at A$36.71 per share, with a decline of 1.871% compared to its previous close. Moreover, the annual dividend yield was recorded at 4.7%.

Also Read: BHP Flags Risks for Near-Term; Annual Profit Down by 4 Per Cent

Rio Tinto declared an interim ordinary dividend of US$2.5 billion,

During the six months ended June 2020, Rio Tinto Limited (ASX:RIO) declared an interim ordinary dividend of US$2.5 billion, demonstrating an interim payout ratio of 53% of H1 underlying earnings. The interim dividend is equivalent to 155 US cents per share.

At the end of each financial period, the Company Board determines an appropriate total level of ordinary dividend per share, that is determined based on the results for the financial year, the future outlook for major commodities, the Board’s outlook of the long-term growth prospects of the business and maintaining a strong balance sheet. The final dividend is determined by striking a balance by giving appropriate weightage to the interim and final dividend.

Interesting Read: Rio Tinto Identifies Shortfall in Internal Heritage Management

Rio Tinto’s shareholders will receive a fully franked 2020 interim dividend. To be eligible to receive the dividend on 17 September 2020, shareholders should own ordinary shares or hold ADRs on the register, by the end of business on 7 August 2020.

In April, the Company paid US$3.6 billion of dividends of 2019 final dividend. The 2019 final dividend payment was one of the key reasons that led to an increase in the net debt which overall experienced a US$1.2 billion rise in 2020 first half to US$4.8 billion at 30 June 2020.

On 9 September 2020, Rio Tinto’s share price was at A$99.080 per share, with a fall of 0.201% from its last close. Annual dividend yield was recorded at 5.7%.

Interesting Read: Rio Cuts Leadership Bonuses Over Destruction of Aboriginal Caves

 

 


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