BHP Billiton chief Andrew Mackenzie has vowed to maintain the company’s generous dividend despite weak commodity prices. Photo: Pat SullivanBHP Billiton’s dividend yield has reached “once in a lifetime” levels, after the company kept a promise to grow the return to shareholders despite posting its lowest profit in more than a decade, analysts say.
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BHP paid out $US1.24 per share in total during the 2015 financial year, which was 2 per cent higher than the previous year despite an 86 per cent slump in statutory profits, and despite the fact the company’s revenues have shrunk on the back of the South32 demerger.

The company’s promise to continue growing dividends prompted its London listed shares to soar by 8 per cent in early trade on Tuesday night before closing 6 per cent higher.

When the dividend is compared to BHP’s share price, the miner is now boasting a better dividend yield than all of Australia’s major banks.

Dividend yields are calculated by dividing the dividends per share by the company’s share price, and the measure provides an insight into how much return an investor is getting on their investment.

The yield on BHP’s Australian shares was 7.36 per cent at the close of trading on Tuesday, while the yield on BHP’s London shares was beyond 8 per cent.

For comparison, Rio Tinto’s yield is hovering just below 6 per cent.

Shaw Stockbroking analyst Peter O’Connor​ left clients in no doubt about the significance of the yield.

“It is worth noting that BHP’s progressive dividend per share ($US1.24) puts BHP on a once in a lifetime/generation dividend yield of about 7 per cent,” he said in a note to clients.

Bernstein analyst Paul Gait said BHP’s yield was higher than had been seen in the mining sector for at least 20 years, if not longer.

“In recent history this is as high as I’ve ever seen it,” he told Fairfax Media.

“So the question is, what moves? Do they cut the dividend or does the share price go up?”

Speaking on Tuesday evening, BHP chief executive Andrew Mackenzie said the company would prefer to cut spending on growth projects rather than cut the progressive dividend policy, which guarantees the dividends will never fall.

“Over my dead body sounds a little strong but it’s almost right,” he said, in reference to the circumstances in which he would be willing to cut the dividend.

“You shouldn’t doubt our commitment to maintain the progressive dividend, quite independent of any divestment or any additional sources of cash. Our ability to defend it comes from our exemplary program for productivity and efficiency and the strength of our balance sheet.”

Mr Gait said the size of BHP’s yield left investors with a “fairly binary” decision to make.

“To the extent that people are somewhat sanguine about the macro environment, this tells them this is rock-bottom prices for BHP Billiton,” he said.

“BHP Billiton is pretty adamant that the dividend is secure, they claim there is plenty of flexibility in the balance sheet and in the capital structure to allow them to weather the storm and they are not going to cut it, ergo this is the time to fill your boots on BHP Billiton shares.

“If, however, you are concerned about the global macro conditions, you have to put BHP Billiton’s assurances to one side. If you are concerned that BHP is going to continue to push tonnes rather than prioritise value then there is further downside on the commodity deck, in which case BHP will eventually have to cut the dividend.

“For me, I think we are at the bottom of the cycle, I think the pain is behind us rather than in front of us and therefore this is the time to buy the mining stocks.”

Liberum analyst Richard Knights said he did not think BHP’s dividend was in danger of being cut in the near term, but he said the company may have to cut eventually if conditions continue to deteriorate.

“Further down the line I wouldn’t rule it out. If we had copper below $US2 per pound, iron ore below $40 per pound and oil where it is for a 12-month period they would be unlikely to be able to cover the dividend without further borrowing, and their credit rating would be already under significant pressure,” he said.

“At that point, they may not be willing to add leverage.”

Copper was fetching $US2.29 per pound on Tuesday evening, while the benchmark iron ore price was fetching $US53.45 per tonne.


Prime Minister Tony Abbott joins the Remote School Attendance Strategy bus to pick up school children for school in Bamaga, during his visit to Cape York on Wednesday. Photo: Alex EllinghausenAbbott pushed for US request to join Syria air strikes
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Prime Minister Tony Abbott says the government expects to make a decision next week on whether to join air strikes in Syria as he brushed aside questions on whether his office pushed for a request from Washington to expand Australia’s involvement.

Mr Abbott told reporters  on Wednesday that cabinet’s National Security Committee would most likely meet next week to determine whether air strikes against Islamic State in Iraq should be expanded into its more dangerous neighbour Syria.

The committee has to meet to make a decision and it is expected that meeting will occur on September 1.

Mr Abbott said the formal request for increased involvement by Australia had been made in a phone call to him from US President Barack Obama.

But he did not deny reports by Fairfax Media that the driving force for the request came from the government and, in particular, Mr Abbott’s office.

“Well, all I know is that I was on the other end of the phone line, the President was on Air Force One, the President had initiated this phone call to talk about the Trans-Pacific Partnership,” Mr Abbott told reporters in Bamaga in Cape York.

“After I initially expressed my condolences for the terrorist shootings in Chattanooga (in Tennessee) the President then raised with me the Syrian situation and said that he would be very glad if Australia would do more, including air strikes.

“I was happy to consider that request and our officials would talk and now this request has come from the Pentagon.”

Mr Abbott said while Australia’s initial commitment was for air strikes in Iraq, it was important Australia did what it could to assist allies in the Middle East and other countries to defeat Islamic State.

“I’ve long thought that while the legalities are different, the moralities of this issue are the same on either side of the border,” he said.

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Health records showed a deterioration in the child after five months of foster care. Photo: Gabriele CharotteTwo foster carers who have been the subject of repeated complaints to the Department of Family and Community Services dating back several years still have two teenage girls in their care, prompting calls for tighter screening and monitoring of carers.
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Medical professionals, the NSW Ombudsman and members of the local community have raised serious concerns about the couple, who cannot be identified for legal reasons.

Health records of one child formerly in their care show a marked deterioration in the state of the child while she lived with the couple.

The records, obtained by Fairfax Media, report the child showed no signs of trauma or malnourishment before going into their care. A follow-up medical report written five months later describes the same child suffering from malnourishment and emitting a foul odour.

The child’s biological mother, who cannot be identified, said she was concerned by her daughter’s dishevelled appearance at contact visits.

“When I read the medical reports, my first thought was that she had been abused,” the mother said. “How else does a healthy child go downhill in such a short period of time?”

The child was removed from their care, but a later investigation by the NSW Ombudsman noted concerns about three other children living with the couple.

The report found the couple had misled health professionals about the children, had exposed them to adult products and videos and locked at least one of the children in his room overnight. A risk assessment featured in the report recommended the removal of the children and the cancellation of their carers’ authorisation.

Shadow minister for Family and Community Services Tania Mihailuk​ questioned why foster children were still in the couple’s care.

“The NSW Opposition expects a full investigation into how it appears that the Ombudsman’s concerns in this case have been ignored and further an inquiry into how this government is failing to properly oversee foster care placements,” she said.

“Questions need to be asked, such as: What are the levels of oversight here? How are potential carers being screened? How often are carers being screened? How many people are on the ground making these checks? What processes are in place to action information gathered during these risk assessments?”

Jacqui Reed, chief executive of the peak advocacy group for children in care, the Create Foundation, said screening and monitoring standards should be improved.

“Create’s research indicates that children want carers and workers who care for them, are consistent and reliable,” she said.

“Yet it isn’t what is happening in practice because there are instances where children are not safe and are slipping through the cracks. What is needed is direct attention being given to this issue and a renewed commitment to providing excellent care through robust processes.”

A spokeswoman for Family and Community Services minister, Brad Hazzard​ said the safety of children in care was “our highest priority”.

A spokesman for the FACS department said probity checks on carers were regularly reviewed and carers were subject to ongoing monitoring. “FACS takes any allegations of harm to children seriously, including those in foster care, so whenever any such allegations arise we investigate,” he said.

“The safety of children is paramount in all FACS decisions. The department has an overriding responsibility to ensure that children entrusted to its care are safe and protected.”


100-year-old seawalls along the Parramatta River are struggling to cope with wash from RiverCat ferries. Photo: Janie Barrett A RiverCat nears the railway and pipeline bridges at Rydalmere on the upper reaches of the Parramatta River. Photo: Mike Bowers
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The wake of RiverCat ferry. Photo: Ben Rushton

A jetty which was once submerged in water is now planted in sand and sediment, which waterfront lessees say has been washed ashore by RiverCat ferries. Photo: Janie Barrett

“Older walls, predating the RiverCats, obviously weren’t designed for this level of wave energy.” Photo: Janie Barrett

RiverCat ferries are causing “sinkholes” along the Parramatta River from Gladesville to Drummoyne, leading to repair bills of up to $300,000 each time, waterfront lessees say.

The issue has caught the attention of George Citer, the chairman of the Waterfront Action Group, who in recent weeks has heard almost daily reports of erosion “sinkholes”.

“Our members have notified us of substantial damage to their seawalls and other structures on the waterfront and they are blaming the RiverCat ferries…specifically the wake caused by the RiverCats,” Mr Citer said.

Waterfront lessees of the land owned by Roads and Maritime Services have been given quotes ranging from $50,000 to $300,000 to repair the damage.

Dr William Glamore, a principal research fellow at the UNSW Water Research Laboratory, said it was possible that wash from the RiverCat ferries was causing erosion.

“There are many reasons you get erosion, but the energy from the RiverCats is completely outside the natural energy of that environment. You wouldn’t normally get waves of that size and shape, particularly of the wave period,” he said. “That is directly related to wave energy…which causes the erosion.”

Dr Glamore said the “sinkholes” to which residents were referring is a process known as “slumping”.

“While the RiverCats are likely to be a major source of wave energy, the slumping occurs because older walls, predating the RiverCats, obviously weren’t designed for this level of wave energy and the rate at which they are failing could be related to the increased wave energy.”

There has been a decades-long campaign against the wash caused by the RiverCat ferries, which dozens of waterfront leaseholders from suburbs such as Drummoyne, Abbotsford, Gladesville and Huntleys Point say are responsible for years of seawall erosion along the Parramatta River.

As the fill behind the seawall is being sucked out by pressure waves, it is causing the land behind the seawall to subside.

“I know of someone in Drummoyne who has spent around $160,000 after two ‘sinkholes’ appeared. They filled one and roughly a year later they had to fill the second with 35 tonnes of concrete,” Mr Citer said.

“We have also been told of a commercial marina that has about $200,000 of damage to its jetties.”

Tony Hopkins, who has been repairing seawalls for 38 years, said the majority of the jobs done by his company Australian Seawall Specialists were the same.

“It’s a maintenance issue a lot of people don’t think about doing. It is their responsibility for them to look after their walls. You can’t blame the ferries, but the ferries are causing it.”

The  impact of the RiverCat ferries on the Parramatta River was examined more than a decade ago. In 1998, The Sun-Herald reported an independent engineering probe had revealed “more than 70km of land fronting the Parramatta River was dangerously eroded…by the ferries’ wave motions”.

Abbotsford Point Boatshed owner Roger Kyle said he still experiences deterioration to his waterfront boatshed, where waves wash up through his floorboards daily.

“I’m not the kind of guy to whinge about it … but it gets to you, you know? You’re up against city hall.”

Since the 1998 investigation, ordered by the Department of Urban Affairs and Planning, there have been two studies into the use of RiverCat ferries on the Parramatta River, in 2010 and 2013, commissioned by eight local governments.

Both reports found RiverCat wash to be “the primary source of erosion” in areas along the  river.

“A key management issue … is instigating modifications to or replacement of the RiverCat with another vessel that generates less wash to reduce further erosion by its wash,” the 2013 Parramatta River Estuary Coastal Zone Management Plan said.

Lawyer Warwick La Hood is representing waterfront owners in their domestic leasing arrangements with RMS, with whom he is working collaboratively on the issue of seawall damage.

“If RMS are aware and have been put on notice that the way they have managed the movement of RiverCats has caused the degradation to the sea wall, they will be exposed to liability in rectifying the damage.”

A spokesman for Transport for NSW said the NSW government’s $100 million boost for Parramatta River ferry services includes four new vessels, and the minimisation of vessel wash will be considered in future design options.

“It should be noted that ferry wash is only one cause of erosion. Other causes include natural events such as severe storms, flooding, high tides, wind fetch and public access to sensitive foreshore areas,” he said

“From around the late 1990s, the speed limit from Silverwater Bridge to Parramatta Weir was reduced to seven knots with vessels directed to move away from the shoreline where possible to minimise environmental impact.”

The RMS would arrange to meet with representatives of the Waterfront Action Group to discuss their concerns, he said.