Freeport-McMoRan (FCX) stunned investors Tuesday by slashing its dividend 84% – erasing a lucrative income stream for investors and serving up a big reminder these payments aren’t guaranteed.
The company, which explores for materials like copper and gold, announced it is cutting its quarterly dividend down from 31.25 cents a share down to just 5 cents. That’s a massive cut in an implied annual dividend of $1.25 a share to $0.20 a share.
Freeport’s cut is staggering. The reduction takes away $1.05 a share from investors – which is no small sum considering the company has 1.04 billion shares outstanding. All told that amounts to $1.1 billion in lost dividends. The executives will feel the loss, too. CEO Richard Adkerson will miss out on $1.6 million a year in lost dividends.
What makes this cut sting even more is that dividend reductions are extremely rare in the materials sector. There have only been 17 dividend cuts by companies in the S&P 500 materials sector in the past 10 years, including Freeport, says S&P Dow Jones Indices.
Dividends can be extremely lucrative. Just ask these seven CEOs that have hauled in $700 million a year collectively from these cash payments. But the cut by Freeport-McMoRan is a big reminder to investors that dividends – while potentially lucrative – aren’t guaranteed.
But you conveniently leave out that their base metals have been increasing during this same period. You also fail to note that the cash in 2011 was during the peak of the gold prices. And why aren't you using the YE 2014 numbers - you slimy fraud?
Lots of data you conveniently leave out, Shortie.
Let's see... low float, no debt, no need to dilute in this mess, profitable, new veins, large lease package on trend, new exploration and oh yeah - a very good PE - all while gold and silver prices are below the cost of production for many miners so either prices need to rise or supply will fall.
Meanwhile the Shanghai Gold Exchange sold over 500 tonnes so far this year - which is a demand rate that almost matches the entire world output. Oh...there's that demand thingy on what will undoubtedly be a period of declining supply due to reduced exploration and a slowing of new mine development.
So pointing this out makes me paid? LOL A HOLE. WHAT A LITTLE TOADIE SCHMUCK!
I have looked at your posts - ignore! Shortie with a SERIOUS problem. And yes, I believe you are either paid or an idiot with no life.
Amazing how these paid bashers roost on some boards for years. Sad life when you think of it. They bash either because they are short or they want to buy cheap. Whatever the reason most people think they are human #$%$ and will lie to achieve their ends.
After these earnings, I would not want to be short this stock. The 4% yield and .30 per share earnings will be attracting attention. A PE of 15 makes this a $4.50 a share stock with the steady dividend, 15 does seem too unreasonable.
If metal prices get legs because Yellen doesn't raise in June and gold levels off north of $1350, the company could probably support dividend raise and we could easily see a $6 to $8 price range.
Either way, a 4% yield is worth the wait with numbers like those just reported. The biggest downside risk appears to be the metal prices. But after this FOMC meeting, the metals are lookin' good! and demand for precious metals is up all over the world with countries swamped with high debts and negative bond yields.