Investors warned of lower dividends from mining stocks

Investors should prepare for lower dividends from some of the most widely owned mining stocks as commodity prices fluctuate and companies prepare for higher capital expenditure, according to Morgan Stanley. While shareholder payouts from iron ore miners proved resilient in the last six months – with Rio Tinto, BHP and Fortescue Metals all beating expectations – iron ore prices have sunk more than 20 per cent since January.

The sun looks to be setting on the era of record dividend payouts by iron ore miners. Morgan Stanley told clients there were particular risks to BHP’s dividend payments given the elevated debt position of the world’s largest mining company and costs related to the Samarco mine disaster in Brazil, with legal proceedings in the United Kingdom due to start in October. The broker forecast that BHP’s payout ratio would be 55 per cent of earnings for the second half of the financial year, falling to 50 per cent in the next

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