South32 Finals

[tjh290633]

For the benefit of those who hold S32, following its demerger from BLT, the results are at https://www.investegate.co.uk/south32-l ... 00106612Y/

Stronger commodity prices and our efforts to mitigate inflationary pressure delivered a 16 per cent increase in Underlying earnings to US$1.3B, free cash flow from operations of US$1.4B and a closing net cash balance of US$2.0B.

The dividend data is given in https://www.investegate.co.uk/south32-l ... 02036068Y/

South32 Limited (ASX, JSE, LSE: S32; ADR: SOUHY) (South32) announced that the Board has resolved to pay a final dividend of US 6.2 cents per share (fully franked) for the full year ended 30 June 2018.

The record date for determining the entitlement to dividend is 14 September 2018; payment date is
11 October 2018.

A Notification of Dividend form (Appendix 3A) is lodged on the Australian Securities Exchange today and voluntarily disclosed on the Johannesburg Stock Exchange and London Stock Exchange by way of submission to the National Storage Mechanism and will shortly be available for inspection at: http://www.hemscott.com/nsm.do.

South32 UK Depository Interest holders will be paid dividends in Pound Sterling (GBP) and South32 shareholders who hold shares on the South African Branch Register will be paid dividends in South African Rand (ZAR).

That is a 5% increase (in US$ terms) over the previous year, but a special dividend of USc3 was paid with the interim.

TJH

[daveh]

They paid 3.6+6.4 cents last year for a total dividend of 10c
This year they are paying 4.3+6.2 for a total of 10.5c plus a 3.0c special with the interim for a total pay out of 13.5c.
So they are a little unusual in that the interim is up, but final is down compared to last year, and the special may well be a 'real' special in that its not to be relied on as a regular occurrence unlike some HYP companies which seem to pay out regular specials.

The market seems to like it - up 5%, but the yield looks to be around 4-5% depending on the exchange rate and whether you include the special.

[Gengulphus]

... and the special may well be a 'real' special in that its not to be relied on as a regular occurrence unlike some HYP companies which seem to pay out regular specials.

I would always assume that dividends announced to be specials are 'real' specials and not to be relied upon as a regular occurrence, until and unless the company has firmly established that they are 'not-so-specials' by both saying that they intend to pay specials as a routine part of their dividend policy and developing a pattern of actually doing so. And even then, treat them as a bit less reliable and more easily cut than their ordinary dividends - if the directors wanted to say that they were just as reliable as the ordinary dividends, they would have simplified things by just adding them to the ordinary dividend rather than preserving their "well, we did tell you they were specials" excuse.

Gengulphus

[funduffer]

Well South32 (S32) has come up trumps since its spin-off from BHP Billiton (BLT) in May 2015.

I started with a small holding following the spin-off, and followed tjh's lead in topping them up to a near median holding in March 2017 at 157p.

I am pleased with the dividend progression since then, and they nicely compliment BLT.

The Mining sector is now just over 9% of my HYP following recent rising prices of BLT and S32, so no more top-ups for now, but pleased with S32.

The lesson learnt from inadvertantly ending up with a small holding following a corporate action is: take my time, look at company announcements for dividend policy, then decide whether to get rid, or top up to a decent size holding. (If leaves the London exchange, then I would always get rid straight away.)

FD

[simoan]

The Mining sector is now just over 9% of my HYP following recent rising prices of BLT and S32, so no more top-ups for now, but pleased with S32.

FD

I think you need to be careful. The mining companies do not have progressive dividend policies and so dividends are essentially variable with the business cycle, hence in good times you will get the occasional special divi. So healthy rises whilst times are good but this could be reversed once earnings fall during a cyclical downturn. Just saying that as an industry it may be worth not having too much exposure compared to some others where there is a defined dividend policy.

All the best, Si

[funduffer]

The Mining sector is now just over 9% of my HYP following recent rising prices of BLT and S32, so no more top-ups for now, but pleased with S32.

FD

I think you need to be careful. The mining companies do not have progressive dividend policies and so dividends are essentially variable with the business cycle, hence in good times you will get the occasional special divi. So healthy rises whilst times are good but this could be reversed once earnings fall during a cyclical downturn. Just saying that as an industry it may be worth not having too much exposure compared to some others where there is a defined dividend policy.

All the best, Si

You are right of course - Mining is very cyclical, but also high yielding so worth having in a HYP if you can stomach the roller-coaster dividends.

FD

[simoan]

You are right of course - Mining is very cyclical, but also high yielding so worth having in a HYP if you can stomach the roller-coaster dividends.

FD

Well, I'm not a HYPster but my understanding is that you want to generate a rising income stream that outstrips inflation. So what you don't really want is to find 9% of your HYP cutting dividends at the worst possible time i.e. during a period of rising inflation. Or will that never happen again? BTW I'm just making the point, not prescribing to any kind of future economic view.

All the best, Si