Thursday, December 9, 2010

Freeport-McMoRan Copper Announces Stock Split, Special Dividend

Interesting news from our prime copper investment. Freeport-McMoRan Copper (FCX) announced a $1 supplemental dividend to be paid to shareholders of record on December 20. This is on top of the increase to the annual dividend from $1.20 to $2 announced back in October. All of a sudden this volatile copper and gold play is becoming a nice yielding stock. On top of the dividend news, FCX also announced a 2-1 stock split on February 1, 2011.

In general this news shouldn't do that much for the stock as I don't think one time dividends do much for shareholders and a stock split should naturally have no impact. It is good though for companies to split when stock prices soar into triple digits. For small accounts like those on Covestor, it can be difficult to make a position in stocks like FCX or Apple (AAPL) because of the high stock price. Somebody wanting to invest $500 would either have to buy 4 shares for $440 or 5 for $550. Not ideal for a diversified portfolio.

Ultimately these moves won't have a huge impact on the stock, but the short term could be meaningful. For whatever reason, these stock splits tend to attract more investors trying to daytrade the news.

More importantly though the signal by the BOD is that FCX has a very positive future and a strong balance sheet. As long as Copper and Gold continue on a race higher, FCX will see huge cash flows in 2011 and beyond.


Via PR:


  • announced today that its Board of Directors has declared a supplemental common stock dividend of $1.00 per share to be paid on December 30, 2010 to shareholders of record as of December 20, 2010. The supplemental dividend to be paid in December represents an addition to FCX’s regular quarterly common stock dividend. In October 2010, FCX’s Board of Directors announced that it has authorized an increase in its annual common stock dividend from $1.20 per share to $2.00 per share.
  • FCX also announced today that its Board of Directors has declared a two-for-one split of its common stock. The split will be effected in the form of a stock dividend payable on February 1, 2011 to shareholders of record on January 15, 2011. Shareholders will receive one additional share of common stock for each share of common stock held on the record date. The additional shares will be issued to shareholders on February 1, 2011. As a result of the stock split, the number of outstanding shares of common stock will increase to approximately 942 million from approximately 471 million.
  • James R. Moffett, Chairman of the Board and Richard C. Adkerson, President and Chief Executive Officer of FCX, said, “The authorization of this supplemental dividend reflects the strong current cash position and significant cash flows being generated by our global operations. The Board’s decision to split the stock reflects the strong share price performance of our shares and positive outlook for our business. Our financial strength combined with the positive market environment and outlook will enable us to continue to invest aggressively in our attractive portfolio of growth projects and enable us to grow our assets while providing strong returns to shareholders.”



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