Analyst Sees Future Dividend Cut for Cliff's Natural's Resources (CLF)

Analyst Sees Future Dividend Cut for Cliff’s Natural’s Resources (CLF)


BMO Capital analyst reported on Monday that he sees natural resources company, Cliffs Natural Resources Inc(CLF) cutting its dividend significantly.

After finishing the shortened session with only a 0.9% increase on Friday, analysts at the firm are forecasting a cut in the stock’s dividend. Analyst Tony Robson believes that the current quarterly dividend of 62.5 cents is “not sustainable.” This dividend leaves the stock with a payout ratio close to 100 percent, although the company is currently maintaining enough cash flow to meet their dividend obligations for now.

Robson also noted that he believes that due to CLF’s high operating costs and leveraged iron-ore prices, the stock is a high risk investment. He sees the dividend dropping to 28 cents, which would leave the stock with a dividend yield of approximately 3.6%, compared to its current yield of 8%

Cliffs Natural Resources shares were mostly flat during premarket trading Monday.

The Bottom Line
Shares of Cliffs Natural Resources (CLF) have a 8.01% dividend yield, based on Friday’s closing stock price of $31.23. The stock has technical support in the $25-$27 price area. If the shares can firm up, we see overhead resistance around the $34-$35 price levels.

Cliffs Natural Resources Inc(CLF)is not recommended at this time, holding a DARS™ Rating of 3.1 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.