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Biggest Australian Stock Dividend Besieged as BHP's Woes Deepen

BHP Billiton Ltd. has already lost its title as Australia’s most valuable stock, and now its status as the biggest dividend-payer may be under threat.

The mining company’s market value is down A$161 billion ($115 billion) from a 2008 peak, when it had almost three times as much clout in the country’s equity index as its nearest rival. BHP may be forced to cut shareholder payouts as a deadly mining disaster in Brazil adds to the company’s woes amid slumping commodity prices and slowing global growth, according to Craigs Investment Partners Ltd. BHP gave $6.5 billion to shareholders in the most recent financial year, more than any other Australian listed company, and has committed to steadily increasing its payouts.

“There’s a view in the market that they should be open to cutting the dividend, that they shouldn’t be desperate to hold it up at all costs,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “There isn’t unanimous support for the dividend being held at existing levels. Whether they have to listen to some of those corners of the market and take some action, it’s looking increasingly likely,” he said.

BHP’s payout policy is in focus after its Brazilian iron-ore joint venture with Vale SA was devastated by mudslides caused by the rupture of dams last week. The site is now indefinitely closed and Deutsche Bank AG said cleanup costs may exceed $1 billion.

Credit Rating

Even before the disaster, Standard & Poor’s and Fitch Ratings Ltd. put BHP’s credit rating on...