The Australian mining giant did away with its progressive dividend policy last year. Some analysts believe this decision might be the reason for the company’s recent woes.
One of the observations regarding the investor activism being encountered by BHP – the mining firm that reaffirmed its Australian roots by dropping the ‘Billiton’ from its name last month – is that it perturbed the market by abandoning its progressive dividend policy.
The Melbourne-based group, the world’s largest miner, cut its dividend in February 2016 – the first time in 15 years – and said it would depart from the payout policy in favour of returning a proportion of earnings to shareholders.
A progressive dividend policy is one where the payout rises at least in line with the share earnings percentage, but set against the commodity price correction the group felt it was too exposed offering ever escalating returns.
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