Commodities & Metals
Cliffs Become Dividend Lesson of Coal & Mining (CLF)
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Cliffs Natural Resources Inc. (NYSE: CLF) has remembered a trick that other companies often use to try to bolster confidence amidst a share price confusion…. It is increasing the shareholder dividend.
Cliffs decided that it would focus on more of a greater shareholder return rather than aggressive growth efforts. To foster that shareholder return, the dividend was raised by more than 100% to $0.625 per share per quarter from a prior $0.28 rate.
The new $2.50 annualized rate, coming to $350 million in total payments to holders, compares to Thomson Reuters estimates of $9.66 EPS for all of 2012 and compares to $11.65 EPS projected for all of 2013. The new dividend yield comes to 3.6% even after the 7% gain to $69.50 today. The 52-week trading range is $47.31 to $102.48.
Another consideration is that there is $521.6 million in cash and another $526.6 million in long-term investments. Before getting too aggressive on thinking that a payout of more than 25% can go to 50%, keep in mind that Cliffs has long-term debt burden of $3.6 billion and its total liabilities are $8.75 billion.
The coal and mining sector might want to pay attention to Cliffs today, particularly considering how those other stocks have performed of late.
JON C. OGG
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