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miners

General discussions about equity high-yield income strategies
kempiejon
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miners

#387197

Postby kempiejon » February 16th, 2021, 2:31 pm

As posted on another board BHP Group have released a big 55% jump in dividend, last year Rio posted a record breaking increase and are due to report shortly. I see my miners have been going up in price yet even so there are some high yield s there.

Whilst idly mulling these thoughts I popped by AJ Bell website and see they published this.
https://www.youinvest.co.uk/articles/in ... idend-hole
Anglo American, Antofagasta, BHP, Evraz, Fresnillo, Glencore, Polymetal and Rio Tinto are now expected to pay dividends worth £13.5 billion in calendar 2021. That is a record high for the sector and represents 18% of the FTSE 100’s forecast £74 billion total, the highest percentage contribution to the index’s overall pay-out from the mining sector.

I thought historically miners had been fat and famine but from an income perspective mine, Rio and BHP, have been pretty good, a few stumbles but quickly recovered.

tjh290633
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Re: miners

#387221

Postby tjh290633 » February 16th, 2021, 4:25 pm

Natural Resources have been cyclical over the years. I have held JP Morgan Natural Resources and its predecessors since 1970, over which time there has been a steady, but not uninterropted, rise in unit value. There are dips in 1974, 1981, 1999, 2009 and in 2020. It's not all miners, of course, but much of it is.

I have held BHP since 2010 and RIO since 2016. BHP has been topped up 5 times, first bought at £19.94, then topped up twice in 2013 at £17.98 and £17.89, again twice in 2015 at £14.46 and £13.12, and finally in 2019 at £17.30. South32 was also demerged in 2015. £22.28 at last night's close. IRR 8%.

RIO, on the other hand, was bought in 2016 in two tranches, at £22.09 and £20.29, the trimmed back when overweight in 2016 at £31.97, again in 2019 at £47.26 but topped up later in 2019 at £41.18 and trimmed back yet again in 2020 at £46.38. £61.86 at last night's close. IRR 36%.

There is a big difference in their performance.

South32 has had its ups and downs since the demerger 2015, initially at £1.16. I have added to what I received at £1.02, soon after demerger, in 2018 at £1.88, twice in 2019 at £1.86 and £1.56, and again that same year at £1.36. £1.48 at last night's close, IRR 3.7%, but a single share would have given 8.1% since the demerger.

It does not look as if splitting off S32 has had any big effect on BHP.

RIO has had much bigger rises in dividend so far, from 134.36p in 2016 to 297.21p from the last two dividends and they report their final tomorrow. BHP cut its dividend in 2016, to 30cents, from 124cents in 2015, now 156cents with the last two declared, which rather shows it up.

Always an interesting ride.

TJH

Lootman
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Re: miners

#387223

Postby Lootman » February 16th, 2021, 4:32 pm

There are very few market sectors where the UK can honestly claim to have even one world-beating company, let alone two.

But with BHP and Rio Tinto, that is the case. It seems to me that those two are best in class, globally, at least for non-precious metals. (Of course, neither has much in the way of UK operations).

So even at a time when I eschew UK shares and higher yielding shares, I continue to hold these two and cannot see that changing. The only other mining companies I own are more specialised e.g. Freeport McMoran (copper), Fresnillo (silver), Sibanye-Stillwater (platinum/palladium) and Newmont and Barrick (gold).

88V8
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Re: miners

#387261

Postby 88V8 » February 16th, 2021, 6:49 pm

We have fairly large positions in RIO and BHP, plus indirect holdings via BERI the Black Rock Resources IT.
I added to all three during the panpanic, which by luck was one of my better decisions.

But yes, cyclical. I remember Valuemargin making a strong case for Antofogasta some years ago on the strength of their reliable specials. Which were reliable until they weren't.

But for the moment, these megaminers are providing a nice substitute for Shell and BP in the dividend stakes.

V8

77ss
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Re: miners

#387267

Postby 77ss » February 16th, 2021, 7:13 pm

kempiejon wrote:....
Anglo American, Antofagasta, BHP, Evraz, Fresnillo, Glencore, Polymetal and Rio Tinto are now expected to pay dividends worth £13.5 billion in calendar 2021. That is a record high for the sector and represents 18% of the FTSE 100’s forecast £74 billion total, the highest percentage contribution to the index’s overall pay-out from the mining sector.

I thought historically miners had been fat and famine but from an income perspective mine, Rio and BHP, have been pretty good, a few stumbles but quickly recovered.


I have held RIO since 1998. Some ups and downs on the way, but there has been a great deal more 'feast' than 'famine'. Both from an income perspective and a capital growth one. An XIRR of 34.5% - similar to that reported by tjh.

I no longer bother with other miners (ANTO, BHP, FRES) as individual holdings. Not worth the extra effort involved. I do have some small holdings via ITs but those are incidental really.

RIO's current yield (at 6260p) is 4.75% (5.43% at the begining of the year). I look forward to tomorrow's finals.

Bouleversee
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Re: miners

#388008

Postby Bouleversee » February 19th, 2021, 4:23 pm

They are certainly very volatile and some of mine, obviously bought at the wrong time, are only recently showing a profit. I swore I would sell them if they did that but those juicy dividends are very tempting and will compensate for dearth elsewhere; also I wouldn't know where else to put my money at the moment. My Anglo American have almost doubled since purchase in Oct. 2017. Antofagasta is still showing me a loss, however.

scrumpyjack
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Re: miners

#388013

Postby scrumpyjack » February 19th, 2021, 4:52 pm

Rio in particular have done very well for me, BHP well but less so.
There is a view that we are at the start of a major uptrend in commodity prices but I shall stick with them whatever point in the cycle we are. BHP got rid of its lower quality assets into South 32 and Rio is in an incredibly strong position. It is mainly iron ore and its largest mine Pilbara has a cost of production of about $15 per tonne, which it then sells for about $100 a tonne. So its profit cycle should be good at the low point of prices and brilliant at the top. The dividend policy is to follow the cycle rather than maintaining a high dividend when prices are low. But that is sensible.

Don't bother with any other miners


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