Halts Dividends as Miners Face Commodity Fall

Anglo American Plc dropped to a new record low after scrapping its dividend for the first time since 2009 and pledging deeper spending cuts to help the mining company withstand a collapse in commodities. The company will suspend its payouts for the second half of this year and for 2016, it said in a statement Tuesday. Anglo is abandoning its practice of steadily increasing the dividend in favor of a system that allows the payment to rise and fall with the company’s profits, known as a dividend payout ratio. Chief Executive Officer Mark Cutifani is seeking to turn around the company’s fortunes in the face of metalprices at the lowest in about six years and China’s sluggish economic growth.

By the time Anglo suspended its dividend in 1998, the S&P Metals & Mining Index was down 50% from its monthly closing high. In 2008, it was down 67%. Currently, it is down 69%…These dividend suspensions are exactly what potential shareholders should be looking for as a signal that sentiment is nearing a trough.”

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