Vale's dividend at risk of slump, say analysts

Rio de Janeiro

VALE SA is forecast by analysts to cut its annual dividend by almost half, jeopardising its status as the most generous major mining company as iron ore prices plummet.

The Rio de Janeiro-based company will pay US$2.2 billion in dividends this year, down 47 per cent from last year and the lowest level since 2007, according to the average estimate of 12 analysts surveyed by Bloomberg. The miner is scheduled to announce its minimum dividend payment target later this month.

While it has been reducing payments since shelling out a record US$12 billion in 2011, Vale still paid more relative to its share price than its main competitors, with an 8 per cent dividend yield. That status may be lost as Vale reaches the halfway mark of a US$20 billion expansion just as prices of iron ore and copper fall to the lowest in more than five years and BHP Billiton Ltd and Rio Tinto Group reiterate pledges to bolster sharehol…