Nevada News Reporter

$1.1 billion in dividends just vanished

$1.1 billion in dividends just vanished

Freeport-McMoRan stunned investors Tuesday by slashing its dividend 84% – erasing a lucrative income stream for investors and serving up a big reminder these payments aren’t guaranteed. The company, which explores for materials like copper and gold, announced it is cutting its quarterly dividend down from 31.25 cents a share down to just 5 cents. That’s a massive cut in an implied annual dividend of $1.25 a share to $0.20 a share.US-Dollars1

Freeport’s cut is staggering. The reduction takes away $1.05 a share from investors – which is no small sum considering the company has 1.04 billion shares outstanding. All told that amounts to $1.1 billion in lost dividends. The executives will feel the loss, too. CEO Richard Adkerson will miss out on $1.6 million a year in lost dividends.

What makes this cut sting even more is that dividend reductions are extremely rare in the materials sector. There have only been 17 dividend cuts by companies in the S&P 500 materials sector in the past 10 years, including Freeport, says S&P Dow Jones Indices.

Dividends can be extremely lucrative. Just ask these seven CEOs that have hauled in $700 million a year collectively from these cash payments. But the cut by Freeport-McMoRan is a big reminder to investors that dividends – while potentially lucrative – aren’t guaranteed.

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