Exxaro’s decision to almost double its dividend might have improved shareholder optimism on coal’s prospects, but it is in fact a passive investment in iron ore that provided the fillip for investors. The dividend of R5.30 a share, as announced by the company in its interim results on Thursday, caused the share price to close almost 8% higher. The generous payout, R2.30 higher than the last interim dividend, is because of Exxaro’s new policy to pass on returns from the coal miner’s 21% black empowerment stake in Kumba’s Sishen Iron Ore Company. The Sishen dividend contributed more than R1.2bn, 63%, to the R1.9bn interim dividend. Previously, Exxaro’s dividend was based on a cover ratio of 2.5 to 3.5 times core attributable group earnings. But now it passes on the dividend from Sishen as well as a dividend based on a targeted cover ratio of 2.5 to 3.5 times core attributable earnings from the coal business. "Exxaro previously reinvested the cash in the business, but now we are in a p...
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