Investors won’t have to wait to start reaping the rewards from the falling Australian dollar. The final dividend payment from our largest miner BHP Billiton Limited (ASX: BHP) has just shot up by around $185 million. We don’t get to say this often, but we can thank US President Donald Trump for this as he is largely responsible for putting pressure on the Aussie, which has shed around 4% in value to fall to around US71 cents in the three weeks since BHP released its full year results and declared a US63 cents per share dividend. The conversion rate was…
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Investors won’t have to wait to start reaping the rewards from the falling Australian dollar. The final dividend payment from our largest miner BHP Billiton Limited (ASX: BHP) has just shot up by around $185 million.
We don’t get to say this often, but we can thank US President Donald Trump for this as he is largely responsible for putting pressure on the Aussie, which has shed around 4% in value to fall to around US71 cents in the three weeks since BHP released its full year results and declared a US63 cents per share dividend.
The conversion rate was only fixed yesterday and couldn’t come at a better time for shareholders who qualify for its juicy dividend, particularly if they qualify for the associated franking credits.
The good news is that the good times are expected to keep rolling on as currency experts are tipping further weakness for the Aussie currency.
It’s not only the threat of a full-blown trade war between our most important trading partner, China, and the US that will keep our dollar on the backfoot. The latest interest rate rises from Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) are also inadvertently pushing our dollar lower.
The out-of-cycle increase in the mortgage rates means the Reserve Bank of Australia (RBA) won’t need to do any of the heavy lifting for a long time while the US Federal Reserve is forecast to raise rates two more times this year.
The widening interest rate differential between our two countries will suppress interest in the Aussie battler. That will suit investors just fine if they are overexposed to US-dollar earners like building materials group Boral Limited (ASX: BLD), glove maker Ansell Limited (ASX: ANN) and logistics group Brambles Limited (ASX: BXB) – just to name a few.
The other interesting takeaway from all this is that BHP and its peer Rio Tinto Limited (ASX: RIO) have become far more reliable income stocks than some sceptics would have thought.
The weak Aussie provides these miners with another buffer when it comes to dividends and stocks like BHP are on yields of over 7% if franking is included.
Miners aren’t typically liked by income investors as their payouts can vary quite a bit. This remains so, but more in a good way, as our mining giants have (or are in the process) sold assets and returned the proceeds to shareholders.
There is also the inherent variability of their earnings from fluctuating commodity prices and capex requirements, but I believe that BHP and Rio Tinto will remain among the highest yielding blue-chips on our market for the next year or two, if not longer.
These aren’t the only attractive blue-chips paying a yummy dividend. The experts at the Motley Fool have picked three of their favourite blue-chip stocks for FY19 and you can find out what these stocks are by clicking on the free link below.
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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Boral Limited, Brambles Limited, Rio Tinto Ltd., and Westpac Banking. The Motley Fool Australia has recommended Ansell Ltd. 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.