Cliffs Become Dividend Lesson of Coal & Mining (CLF)
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…
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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
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
