Teck Resources Ltd. maintains it has no plans to cut its $510-million dividend, even as investors send its yield to sky-high levels.
The Vancouver-based miner’s stock has been in freefall recently, dropping 36% in the past three weeks amid tumbling oil prices and continued weakness in coking coal prices. That leaves the company with a dividend yield of 7%, which is well above serious dividend payers such as BCE Inc. (4.8%), Fortis Inc. (3.4%) and all the big Canadian banks.
It is highly unusual for a growth-oriented mining company to have a yield that high. In the past, it has often been a signal of an imminent dividend cut.
In Teck’s case, experts are far from convinced that will happen. They said a dividend reduction in 2015 is a possibility given weak commodity prices and the company’s huge capital commitments at the Fort Hills oil sands project. But they also said the high yield just reflects extreme short-term volatility in the market, and may be irrelevant.
Teck, for one, maintained the dividend is secure. “Teck is committed to the dividend,” spokesman Chris Stannell said.