BC Iron ramps up dividend after a bumper year
The trend for better than expected dividends in the resource sector has continued, with junior miner BC Iron more than doubling dividend expectations on Wednesday.
BCI revealed a 35¢ full-year dividend that easily exceeded last year's 15¢ payout, helping BCI shares soar to their highest in the company's seven-year history.
The dividend rush came after another strong year for the iron ore exporter, which increased underlying profit by more than 40 per cent to $71.4 million. Net profit of $48.8 million was slightly lower than last year's $50.6 million, after the company took a foreign exchange loss on US-denominated debt and wrote down the value of holdings in two other ASX companies.
BCI managing director Morgan Ball said 2013 had been an outstanding year "on any measure".
"BC Iron has achieved record production and financial results, which has pleasingly been reflected in a very strong comparative total shareholder return," he said.
Octa Phillip analyst Andrew Shearer said BCI's 2009 deal with Fortescue Metals Group had been vindicated, despite BCI having to trade 50 per cent of its iron ore tenement for port and rail access.
While many other Pilbara juniors are floundering without transport solutions, BCI has been exporting for the past 30 months because of the Fortescue deal, giving it exposure to what could be the last of the high iron ore prices.
Mr Shearer said the results had reinforced that BCI has "great management, a great asset, and a simple story".
"The dividend payout ratio is more like the sort of payout ratio you see from an industrial rather than one typically associated with resource stocks."
BCI's strong dividend flows continue a trend that has emerged throughout this year's reporting season.
Dividend payouts from the biggest 200 companies on the ASX are reportedly approaching historic highs of about 70 per cent of underlying profits. The mining sector traditionally lags other sectors in terms of dividend payout ratios, but has surprised this year by delivering a series of better than expected dividends.
BCI's big payout follows Fortescue's 10¢ dividend last week, which more than doubled the 4¢ analysts were expecting.