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ASX BHP: Billion-dollar wealth hit afoot as the big miner’s dividends fall

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The big miner’s place in history and our retirement savings means nearly 70 per cent of Australians face a financial hit as it prepares to pay lower cash dividends.

Morgan Stanley this week told clients there were higher risks to BHP’s dividend payments given its elevated debt position and costs related to the Samarco mine disaster in Brazil, with legal proceedings in Britain due to start in October.Shareholders could miss out on $1.3 billion in payouts over the year to June 30, assuming an approximate 10 per cent fall in dividends in line with market expectations.

BHP is the most widely held stock by self-managed superannuation funds. It features in 48 per cent of SMSFs and makes up 5 per cent of investments in the $890 billion sector, according to software provider Class, which services about 200,000 SMSFs. Not only are BHP shares popular among retirees, they are also among Australia’s most inherited stocks. “BHP is seen as patriotic, quality, and an enduring brand name that’s been around for more than 50 years,”

Among Citi brokers, the consensus is that Rio shares will rise 20 per cent in 12 months compared with just 6 per cent at BHP.

 

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