How BHP Billiton plc Will Deliver Its Dividend

What can investors expect from BHP Billiton plc (LON:BLT)’s dividend?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m looking at some of your favourite FTSE 100 companies and examining how each will deliver their dividends.

Today, I’m putting BHP Billiton plc (LSE: BLT) (NYSE: BBL.US) under the microscope.

Dividend policy

The directors of BHP Billiton tell us:

“BHP Billiton has a progressive dividend policy. The aim of this policy is to steadily increase, or at least maintain the dividend in US dollars at each half-yearly payment”.

The dividend is set in US dollars because the company’s financial reports — as with miners in general — are compiled in that currency. Therefore, due to exchange rates, there is some variability in income growth rates for UK investors who take their dividends in sterling. Sometimes exchange rates work in favour of UK investors, and sometimes against.

When it comes to judging the dividend policy, though, we have to look at the performance of the dollar dividend.

Past dividend performance

The table below shows BHP Billiton’s dividend record over the past 10 years.

Year end
(30 June)
per share ($)
Growth (%)
2012 1.12 10.9
2011 1.01 16.1
2010 0.87 6.1
2009 0.82 17.1
2008 0.70 48.9
2007 0.47 30.6
2006 0.36 28.6
2005 0.28 55.6
2004 0.18 16.1
2003 0.155 14.8

As you can see, BHP Billiton has an excellent dividend record. The company not only delivered sky-high increases through the boom years of the mid-Noughties, but also continued to raise the dividend at a good clip through the global financial crisis and economic downturn of 2008/9.

BHP Billiton’s record is actually unique among its big FTSE 100 sector peers: Anglo American, Rio Tinto and Xstrata (now Glencore Xstrata) all slashed their dividends during 2008/9. BHP Billiton’s resilience reflects the fact that it is the most diversified miner on the block.

Dividend prospects

The past 12 months have been tough for miners generally, and analysts expect BHP Billiton’s earnings to fall around 30% when the company announces its results next month for the year ended 30 June.

Nevertheless, BHP Billiton lifted its interim dividend by 3.6%, and if the final dividend is increased by the same order, analyst forecasts suggests the year’s payout will be twice covered by earnings. For the year to June 2014, the analysts expect to see a return to double-digit earnings and dividend growth.

To sum up, BHP Billiton has been a great share for dividend investors: the group’s diversification and dividend record put its rivals to shame, and good dividend growth is forecast to continue. Furthermore, you can currently buy into all this with a starting income of over 4% compared with the FTSE 100 average of 3.3%.

Finally, let me finish by saying that if you already own shares in BHP Billiton, you may wish to read this free Motley Fool report. You see, the report highlights five more top-notch blue chips that have been pinpointed by our leading analysts as “5 Shares To Retire On“.

The fab five, which include a utility group “with nearly guaranteed returns” and a healthcare company with “prodigious cash generation”, are some of the highest-quality businesses you’ll find within the FTSE 100.

This free report can be yours right now with no further obligation — simply click here.

> G A Chester does not own any shares mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

Down 23%! Should I buy more CrowdStrike shares for my Stocks and Shares ISA?

Sometimes bad news can be good news for long-term investors. But is that the case for CrowdStrike in relation to…

Read more »

Investing Articles

2 UK shares near 52-week lows I’m considering snapping up

These UK shares are loitering near, or at, 52-week lows. Are these prime opportunities for our writer to boost her…

Read more »

Investing Articles

Unilever: a passive income stock with potential for decades of dividend growth

Stephen Wright thinks Unilever can keep reducing its share count for years to come. And this should help make it…

Read more »

Middle-aged black male working at home desk
Investing Articles

Worried about retirement? I’d buy high-yield dividend shares to build wealth

The number of pensioners enduring poverty in the UK looks set to rise. Investing in dividend shares could help Britons…

Read more »

Investing For Beginners

2 boring but beautiful FTSE 100 stocks to add to my ISA

Jon Smith runs over a couple of FTSE 100 stocks that he really likes the look of, even though they…

Read more »

Investing Articles

Here’s how I could supercharge my wealth by snapping up the best dividend stocks!

This Fool explains how dividend stocks play a crucial part of her aspirations to build wealth, and details one pick…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Revenue up 10% and accelerated growth potential for this overlooked FTSE 250 company

Today's first-quarter update from this good-value FTSE 250 company keeps me keen on the stock as recovery and growth continues.

Read more »

Investing Articles

Here’s why I’m so bullish about the BT share price now

The BT share price shot up after FY results, and a couple of months on it's still up there. Might…

Read more »