BHP Billiton Limited (ASX: BHP) shares have been slammed this morning following another steep decline in oil prices overnight. With Brent oil, the global benchmark, having plunged 4.9% to US$53.65 a barrel, shares in the world's largest miner have also retreated 4.2% to just $28.25.
So What: BHP Billiton has been hit hard in recent months thanks to its heavy exposure to the iron ore and oil markets. The two commodities, which account for the majority of BHP's revenues, have roughly halved in value over the last year which could drastically effect the miner's earnings and its ability to return additional cash to shareholders.
In fact, according to The Sydney Morning Herald, UBS mining analyst Glyn Lawcock has said that BHP will run no additional capital management this year, a belief closely echoed by Credit Suisse analyst Paul McTaggart. Although the miner's spinoff 'South32' could be considered a capital return, many investors had been hoping for a share buyback program or, at the very least, a special dividend.
Unfortunately, neither of those initiatives is looking likely anymore and investors appear to have all but given up hope with the miner's shares having lost more than a quarter of their value since August 2014.
Now What: Thankfully, it's considered unlikely that BHP will cut into its progressive dividend policy which is good news for income investors. Although some expect the dividend to remain flat, the miner should still yield at least 4.5% fully franked in FY15.
However, it may be wise to hold off from buying BHP Billiton just yet. Although it's certainly a tempting prospect at its current price, the shares could fall even lower in the coming weeks or months if iron ore or oil prices continue to drop, as a number of analysts are anticipating. Investors who wait could be presented with a better buy price and indeed, a superior dividend yield.
