Is BHP Billiton plc (ADR) (BBL)’s Dividend Safe? Dividend Cut Risk Examined

BHP Billiton plc (ADR) (NYSE:BBL) is the largest publicly traded mining corporation in the world.  The mining behemoth is one of Australia’s top dividend stocks.

The downturn in metal and energy prices has deeply affected BHP Billiton’s operations.  The company’s share price has collapsed.

BHP Billiton stock is trading around absolute lows not seen since the Great Recession.

Similarly, BHP Billiton doesn’t seem to be very popular among smart money investors and just 20 funds among those tracked by Insider Monkey held shares of the company at the end of September, 2015. These funds amassed just 0.30% of the company’s outstanding stock. In the current round of 13F filings, Simon Sadler’s Segantii Capital disclosed holding 2.80 million shares of BHP as of the end of December.

Source:  Finviz

Despite the decline in metal and energy prices, BHP Billiton has not cut its dividend.

Yet…

This article takes a detailed look at BHP’s:

– Current dividend yield

– Dividend history

– Likelihood of a dividend cut coming soon

BHP’s Dividend Yield

It’s not surprising that dividend investors are interested in BHP Billiton. The company has an exceptionally high dividend yield.

BHP Billiton plc (ADR) (NYSE:BBL) stock currently has a dividend yield of 12.1% (no, that is not a typo). The company is among the highest yielding large cap stocks.  

There are only 9 other publicly traded stocks in the United States with market caps above $10 billion and dividend yields above 10% :

– Vale (VALE) has a 11.9% dividend yield

– Ecopetrol (EC) has a 16.6% dividend yield

– KKR & Co. (KKR) has a 10.8% dividend yield

– Vodafone (VOD) has a 12.0% dividend yield

– BHP Billiton (BHP) has a 10.9% dividend yield

– Telecom Italia (TI-A) has a 11.6% dividend yield

– Banco Bradesco (BBD) has a 11.8% dividend yield

– Banco Santander (BSBR) has a 12.6% dividend yield

– Petroleo Brasileiro/Petrobras (PBR-A) has a 11.0% dividend yield

Yields of 10%+ are unusual for shareholders of BBL. The stock’s dividend yield has slowly risen over the last 10+ years.

BHP’s Dividend History

BHP’s management has steadily increased its dividend payments over the last decade.

Rising dividend payments and the steep share price declines have resulted in double digit dividend yields.

The company’s high dividend yield is appealing to dividend investors – on the surface.

It’s important to note the unusual tax characteristics surround the company’s shares.