TORONTO, April 26 Teck Resources Ltd
said on Wednesday that it will double its dividend
payout and consider a supplemental dividend annually, based on
the diversified miner's free cash flow, capital priorities and
Vancouver-based Teck will now pay an annual base dividend of
20 Canadian cents a share, in quarterly payments of 5 Canadian
cents. That is up from 10 Canadian cents annually, paid in two
installments of 5 Canadian cents.
Under a new policy, supplemental dividends will be decided
by the board and paid on the last business day of each calendar
year, Teck said. Any annual payments may be "highly variable"
from year to year.
After reporting weaker-than-expected profits on Tuesday that
sent its stock down as much as 6 percent, Teck Chief Executive
Don Lindsay said on a conference call that a flexible dividend
policy made sense for companies in the commodity industry, due
to price volatility.
Shares of Teck, North America's largest producer of
steelmaking coal, rose 2.6 percent in early trade Wednesday.
"We believe that the cyclical and capital-intensive nature
of the mining industry makes a progressive dividend policy
difficult to sustain," said TD Capital Markets analyst Greg
Barnes in a note to clients.
"In our view, a base dividend that is supportable through
the commodity price cycle with 'top-up' capital returns to
shareholders when free cash flow permits makes sense for mining
In 2015, Teck cut its twice-yearly dividend two times as
commodity markets swooned, from 45 Canadian cents to 10 Canadian
cents and then 5 Canadian cents.
"The announcement reinforces our positive view on Teck's
improving balance sheet and strong free cash flow," said RBC
Capital Markets analyst Stephen Walker in a note to clients.
"The dividend increase is sooner than we expected and we view it
as positive for Teck shares."
(Reporting by Susan Taylor; Editing by Bernard Orr)