Telstra Corporation Ltd (ASX: TLS) and QBE Insurance Group Ltd (ASX: QBE), traditionally dividend plays, have cut dividends this year. At the same time, some companies in the mining sector have increased dividend payments on the back of robust commodity prices. The dividends of the big four banks post the Royal Commission may also be on a downward path, with profitability and earnings under pressure on the back of stricter lending criteria and competition.
But, mining companies usually not perceived as dividend plays, such as Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are paying annual dividend yields of 4.6% and 3.8% respectively, both fully franked. Mining companies have been able to step up their dividend payments after becoming awash with cash from the rebound in commodities prices, as well as keeping capital expenditure under control and restructuring their businesses when commodity prices went south. Miners such as BHP, have increased dividend payout ratios, from a minimum ratio of 50% up to 72% for FY18.
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Motley Fool contributor Rosemary Steinfort owns shares of BHP Billiton Limited and Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.