Dividend fear at Billiton

FEARS over the future of dividend payouts in the world’s largest miner intensified yesterday as tumbling metal prices continued to hit the sector.

BHP Billiton’s shares fell to their lowest level in more than a decade after it updated on its half year operations and investors feared its cash flow will be under pressure.

BHP paid out $1.24 (87p at today’s exchange rate) a share during 2015. Its dividend yield for 2016 is estimated to be 11.4pc, the top-yielding stock for the year if it pays out.

But Investec analyst Hunter Hillcoat said: ‘We have taken the view that BHP Billiton will need to reduce its progressive dividend.’

BHP Billiton chief executive Andrew Mackenzie did not comment on its dividend but said he was focused on protecting its strong balance sheet.

Mining shares collapsed yesterday, dragging down the wider stock market. BHP’s shares fell 7.4pc or 46.2p to 580.9p. BHP will comment on its dividend policy next month.