- London's biggest miner addresses structure question
- UK jobs market is booming, but is economic recovery pace set to ease?
- Dividend haven crown slips
BHP says goodbye to London with record dividend
The largest member of the FTSE 100 by market capitalisation will drop its dual-listing structure and shift all shareholders to its Australian entity after reporting record dividends and profits for the 2021 financial year.
BHP (BHP) chairman Ken MacKenzie said getting rid of its Plc company would make for a “simpler and more efficient” business. Shares will still be traded in London through a standard listing, meaning BHP will likely drop out of the FTSE 100. Investors were keen on the new arrangement, however, sending the miner’s shares up 6 per cent in early trading.
BHP also used its 2021 results to confirm it would package up its oil and gas assets with Woodside Petroleum (Aus:WPL) in an all-share deal that will hand shareholders a stake in the Australian energy company.
Chief executive Mike Henry also gave the Jansen potash project in Canada the green light, taking BHP into the fertiliser market. The next stage will cost $5.7bn (£4bn) and first ore is expected in 2027.
The 2021 numbers were almost as attention-grabbing as the major strategic changes.
BHP’s underlying cash profits for the year were $37bn, a two-thirds uptick on last year. The final dividend of $2 a share takes the total payout for the year to $15bn or $3 a share, well above the previous record of $2.35 a share following the sale of its onshore US oil and gas operations in 2019.
Read our full analysis of the news here.
Bounceback boom
The UK economy has roared back into life with both job creation and pay booming in July as the economy opened up and coronavirus restrictions eased. A total of 182,000 jobs were added in the month taking the total number of people in employment to 29.8m, although this remains around 200,000 below the pre-pandemic figure. Meanwhile, the number of vacancies in the UK job market has risen to 953,000 - a record high.
This pressure in the jobs market has led to a leap in wage growth too with the latest weekly pay figure showing growth of 8.8 per cent including bonuses. This was the strongest pay growth figure since records began 20 years ago and outstripped the Bank of England’s forecast, potentially adding to the fears around inflation stalking the economy and talk of the Bank having to bring forward interest rate rises. Also, despite the strong performance of the jobs market as the economy has reopened, the most telling data will come in the Autumn with the final withdrawal of all furlough support from the economy.
On top of that, there are some concerns growing that growth may have peaked and will plateau from here. Neil Wilson addresses such concerns in his markets outlook column today. Economists are predicting that the sharp rebound in economic activity in Europe will abate in the coming months and there are increasingly worrying indications coming from China that the surging Delta variant infections there are beginning to dampen its economic recovery.
Investment trust dividend haven wobbles?
The investment trust sector has long been a favourite for income seeking investors. Blessed with the ability to dip into reserves to maintain dividend payments, there are a significant number of investment trusts with multi-decade records of dividend payments and increases - the Association of Investment Trusts keeps a track on these ‘dividend heroes here.
But the opening half of this year has seen the first fall in dividend payments from UK listed equity investment trusts for more than a decade according to research from Link Group. And the second half of the year is likely to see a further fall in dividend payouts as trusts suffer a lag effect from the cuts to dividends made in 2020 and into early 2021. Read more in Dave Baxter’s news analysis on the sector here.
