If you think about basic commodities to power the infrastructure system, the company which stands a top is an Australian company called BHP, it is is the world’s biggest miner. The company mines iron ore, nickel, potash and oil. The world is trying to cut its fossil fuel footprint, what should the company do?
In an article by Sonali Paul and Melanie Burton of Reuters, a decision has been reached and it was announced in mid August. The petroleum division will be taken over by Woodside Petroleum for shares in the company.
Analysts value BHP’s petroleum business made of assets in Australia, Gulf of Mexico, Trinidad and Algeria at between $10 and $17 billion contributing 5% of BHP’s underlying earnings of $14.7 billion in the first half of the year compared to 70% coming from iron ore.
Linking to dividend paying stocks, we are in a change in the world and investors when as long as you made profits to pay shareholders, all was good. There is a shift to make money and do something to reduce global warming. Petroleum is a relatively easy business to analyze as long as it costs less to drill than to sell, the oil is essentially a cash cow and makes it easy to distribute money to shareholders. It is similar to what Warren Buffet said about cigarettes – it costs pennies to make it and sell it for dollars, why would you not want to own shares in the business. As dividend investors, it was difficult not to own shares in the oil industry because they have been some of the biggest dividend payers over the past century, however times can change.
There are more questions than answers, till the next time – to raising questions.