Deutsche Bank Said Mining Companies Dividends Are Not Safe (AA, FCX, PCU, CLF, RIO)
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In a report out this morning, Deutsche Bank said investors are taking false comfort in the dividends of mining stocks and said most metals companies have now gone into "survival" mode and slashing dividends will be the most readily available source of cash.
Deutsche Bank said Alcoa (NYSE: AA) and Freeport-McMoRan (NYSE: FCX) are the most likely to cut dividends within the next 2 months. Well, Freeport-McMoRan did in fact suspend their dividend today, leaving Alcoa as the next likely.
The firm also said it is likely that Southern Copper (NYSE: PCU), Grupo Mexico and Cliffs Natural Resources (NYSE: CLF) will cut their dividends if the severe economic/commodity downturn persists. They also said Vale (NYSE: RIO) could end up cutting its dividend by around 50%.
Deutsche Bank also notes that Coeur d'Alene (NYSE: CDE) has one of the most strained balance in their coverage universe due to its high cash burn rate on expansion capex and still low silver prices.
The firm said Vale remains the most defense name, but it still offers no near-term visibility.
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