Summary: Although BHP Billiton’s dividend question has been in the spotlight, the fall in commodity prices will hurt Rio Tinto too. Rio’s profit is expected to fall this year and next, with most of the forecast $US3.9 billion profit for calendar 2016 likely to be absorbed by dividend payments if the $US2.15 payout is maintained.
Key take out: With commodity prices under pressure, the prospect of dividends becoming part of the “lower-for-longer” trend should not be ignored.
Key beneficiaries: General investors. Category: Mining stocks.