BHP shares are once again testing new lows. After rising above $25 last month they are now back around $22. Consequently the dividend yield is up to 7.4% fully franked. No doubt debate will once again continue on the sustainability of their progressive dividend policy. If the share price continues to fall then it's a very clear signal that market participants are losing faith in the policy.
Here is a monthly chart of BHP going back to 2009.
Source: Yahoo Finance
- The solid bull run after the GFC saw its shares peak in April 2011 at $46.
- The next 15 months to June 2012 saw 12 monthly "falls" and 3 monthly "rises"
- The following 2 years sees the price edge up from $30 to $35.
The next fall from August 2014 looks rather similar to the previous one just described.
- The next 15 months up to today sees 11 monthly "falls" and 4 monthly "rises"
The scale of the two falls are also quite similar.
- April 2011 to June 2012 sees the decline from $45 to $30
- August 2014 to today sees the decline from $35 to $22
While history does not dictate future share price movements it can provide a useful guide to keep things "in perspective". If the current price falls mirror the declines of 2011/12 then perhaps the downside risks are starting to become limited.
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