All of this talk of makin’ bacon while a bunch of Brazilians lie buried in the mud is pretty tasteless but there’s more dumb to expose so I apologise:
As BHP’s market value has been struck down, the dividend yield has shot up to levels where it is “exceptionally high” at about 8 per cent, says Prime Value Asset Management joint chief investment officer ST Wong.
“The sustainability of 8 per cent yield on BHP is in some doubt,” he says. “The company is paying out too much dividends to shareholders at the expense of cashflows.”
…Intelligent Investor senior analyst Gaurav Sodhi [says] the obvious strategy is to buy the company at the bottom of the cycle, and Intelligent Investor has a “buy” recommendation on BHP.
…If the miner drops its progressive dividend policy, Wong says the share price may be more resilient than expected. “I don’t think the market would over penalise them, because it would be partly in recognition that management is doing something to make sure the balance sheet and cashflows are appropriately positioned.”
Note to self, sell ST Wong. Gaurav Sodhi should know better. The bottom of the cycle is either years or a mighty crisis away.
