Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

Inside the Market

Up-to-the-minute insights
on developing market news

Entry archive:

Commodities as dividend plays Add to ...

You might not normally associate commodity producers with dividends, given their cyclical nature. But that could change according to a report from Byron Berry, of Byron Capital Markets.

"With companies like Freeport McMoRan doubling dividends, we have heard market participants discussing the possibility of more dividend increases," he said in a note. "We would not normally look to cyclical for yield or dividend increases, but the combination of a powerful commodities bull run and a market starved for yield could create some opportunities."

He looked at 880 mining and metals companies listed in Canada, with a market capitalization of at least $10-million each. Of these, 46 have positive free cash flow but only 12 companies pay a quarterly dividend. The average yield is about 1 per cent.

However, 12 companies have free cash flow yields above 6 per cent. "We believe this level of FCF yield gives enough headroom for a healthy 3-4 per cent yield and a payout ratio of 40 per cent to 67 per cent," Mr. Berry said.

These companies include Equinox Minerals Ltd. , Inmet Mining Corp. , Russel Metals Inc. , Neo Material Technologies Inc. and Breakwater Resources Ltd. Follow Market Blog on Twitter: @marketblog

Follow on Twitter: @dberman_ROB

Security Price Change
RUS-T Russel Metals 35.25 0.39
1.119 %
Add to watchlist
  • EQN-T
  • IMN-T
  • RUS-T
  • NEM-T
  • BWR-T
Live Discussion of EQN on StockTwits
More Discussion on EQN-T
Live Discussion of IMN on StockTwits
More Discussion on IMN-T
Live Discussion of RUS on StockTwits
More Discussion on RUS-T
Live Discussion of NEM on StockTwits
More Discussion on NEM-T
Live Discussion of BWR on StockTwits
More Discussion on BWR-T


For Globe Unlimited Subscribers

Business videos »

Most popular videos »


Most Popular Stories