Why sell at the bottom. It didn't cost you anything. If you hold, commodities will eventually rise again. UBS put out analysis at the time of the spin off. That is called the commodity cycle. Sell if you are a trader and have another stock sure to go up fast. Hold if you are a commodities investor.
It is the result of complications due to the Dual Listed Company structure, Australian Tax Code, and spin off of S32. Shareholders of the Australian part of the DLC are entitled to franking credits to the extent the company pays income tax, thereby avoiding double taxation of income. Franked dividends paid to the Australian company shareholders are tax exempt.
Even though the DLC companies consolidate income for accounting and dividend purposes, the UK part of the DLC has lost some of its earners in the spin off, and will not have sufficient cash to contribute their full 40% to the dividend pool to maintain the equal dividend to all policy.
From what I have seen so far, shareholders will be asked to allow the Australian company to give up some of their banked franking credits in order for the Australian company to "lend" the UK company sufficient cash [income] to maintain the equal dividend policy.
That is my simplistic analysis. If shareholders do not approve, I'm not sure what will happen. If it is approved it seems to me that the BHP ADS holders would not be affected. There is an article in The Age, Melbourne newspaper "BHP Reveals UK Dividend Plan" that is all I have seen on the subject. Should become clearer when question is submitted.
Article: Business leaders say new Prime Minister Malcolm Turnbull has no time to waste
PAUL GILDER HERALD SUN SEPTEMBER 16, 2015 12:26AM
"CANBERRA must waste no time in healing wounds and turning its attention to promoting Australia’s natural economic advantages, business leaders say.
"But strong leadership is just one piece of the puzzle, they say, with broad reform a necessity to inject new vigour into an overcast economy.
"With former investment banker Malcolm Turnbull sworn in as Prime Minister following a tumultuous 24 hours in the capital, business leaders packaged their congratulations with a simple message: 'Well done, now get us moving.'
"National Australia Bank chief Andrew Thorburn said the country now needed 'political stability' to 'increase business confidence and attract investment to grow our nation'”.
Too soon to tell, really. Lots of hopeful speculation in the Australian newspapers, here is an excerpt from the Melbourne Age:
"Leading investors agree the economy is better off with Malcolm Turnbull running the government and believe he can be the most successful prime minister since John Howard by prioritising the economic management of the country over other issues.
"There might not be much Mr Turnbull can do about the weak iron ore price but investors think he has the ability to lift confidence and implement shrewd policies to put the economy on more stable ground. As global growth recedes and faced with a bear market in commodity prices, Australia's balance sheet looks vulnerable."
Yes, but it is a little complicated. You would do well to visit the Investor tab on the BHPBilliton website. BHP is a dual listed, Australian and UK listed company. The US ADS represents two BHP.AX shares. BHP pays dividends twice a year. For the ADS, the last two dividends [for fiscal year ending 30 June 2015] were US$0.62 per underlying share, $1.24 per ADS, for a total annual BHP ADS dividend of US$2,48 per ADS. With the current ADS priced at US$34.22, the annual trailing dividend yield is 2.48/34.22 = 7.25%.
Because BHP is an oil, metals and coal producer, earnings are expected to be lower for a year or two, so it is unlikely the dividend will increase and could fall. BHP has a 100 year history [on the website] of trying to maintain a conservative, stable dividend policy [stated on the website]. You need to do your homework on the BHP website to fully understand this company and its prospects. A long-time long.
That's "non-cash" write-off. Google it, part of GAAP and US tax code. When an investment is made, cash is spent/invested, and the acquired property is set up on the books as a physical asset at the value of the cash spent on it [debit cash; credit property asset]. If and when and to the extent that the asset becomes uneconomic [unable to earn enough to offset the annual depreciation and operating expenses], it should be "written off" as a no longer valuable asset. The write off does not affect cash, so the cash income stream is not affected. But the reported income for that period is reduced by the amount of the write off, which reduces net worth of the company. This is an over simplification, but you get the drift.
PICK has a good spread of miners/commodities but has too small a market capitalization [only $60m] for my taste. PICK is probably a good way for small, long-term investors to participate in the mining sector if fund expenses [0.39% for PICK] are not too high and they don't churn the holdings [18% for PICK]. Short term is anybody's guess
If you do a Yahoo, five year interactive chart comparison, PICK vs BBL, both are down, but BBL down less than PICK. IMO PICK is less likely to be able to maintain the trailing 11% [historic] dividend. Even BBL's net income was lowest in last six years. BBL has the lowest production costs of the bunch.
For my money, BHP has a better track record than the companies in the PICK ETF. BBL has a more consistent dividend record for over 100 years. They are more diversified than most stocks in PICK. Both will recover when commodity prices recover. I can't say which will do better. I don't buy ETF's. I sometimes make up my own ETF "Fund" by buying the shares of companies I like best in an interesting ETF and avoid the management fees.
Long BHP and BBL for over thirty years.