Deterra Royalties traded ex-dividend again on the 22nd of August, paying a $0.1685 fully franked dividend.
This is the 5th dividend we have received from DRR, taking the grossed-up dividend yield to 24.4%. The dividend this time was lower than the corresponding dividend in 2022, which was to be expected considering the fall in the iron ore price.
Despite the recent negative news around the Chinese property sector, with Evergrande seeking bankruptcy protection in the US, the iron ore price has been increasing. As per the iron ore futures contract chart for September delivery traded in Singapore, iron ore has increased $12.00 in the last two weeks.
The recovery in the price of iron ore can only be attributed to the recent attempt from the Chinese government to stimulate growth through more spending (kicking the can down the road).
The fall in the AUD is the other factor that should support strong dividends into the future. The AUD/USD exchange rate was trading at around $0.69 in mid-July and is now at $0.648.
This is the best of both worlds: a higher USD price for the royalty received converts into more AUD.
TRADE ACTION
No trade action is required. We will continue to hold the stop without a stop loss or profit target.
P.S We would be very tempted to exit if the share price were to trade above the $5.00 level