The South32 Ltd (ASX: S32) share price is continuing to trend upwards this year, buoyed by positive investor sentiment.
The mining outfit’s shares have zoomed almost 30% higher in 2022 in contrast to the benchmark index. The S&P/ASX 200 Index (ASX: XJO) has struggled to hold ground lately, lifting by less than 1% over the same timeframe.
At the time of writing, South32 shares are up 0.49%, trading at $5.135.
Let’s take a look at what could be driving these gains for South32 shares.
Rising commodity prices
Investors have been buying up South32 shares in 2022 as the aluminium price charges higher in recent times.
The war between Ukraine and Russia has pushed a general lift across the board in commodities prices, with demand outstripping supply as constraints kick in.
South32’s main export, aluminium, is currently fetching for US$3.23 per kilogram. That represents a gain of 14% since the beginning of 2022 and is 41% higher than this time last year.
Strong performance
The miner also reported strong performance across key metrics in its FY22 half-year results.
Finishing the period with net cash of US$975 million, the South32 board opted to bump up its dividend to shareholders considerably.
A fully-franked interim dividend of US 8.7 cents per share was declared, reflecting a massive 621% increase from H1 FY21.
Management noted that the latest dividend equates to a payout ratio of 40% of cash earnings, in line with its dividend policy.
With bumper returns due to the rising price of aluminium, shareholders may be expecting another strong dividend for the full year.
It is also worth noting that there is a capital management program that has been active since FY18. This returns excess capital efficiently through an on-market share buyback.
The board further expanded its capital management program by US$110 million to US$2.1 billion, leaving US$302 million to be returned by 2 September 2022.
South32 share price summary
Over the past 12 months, the South32 share price has climbed almost 80% on the back of favourable market conditions.
The company’s shares reached a record high of $5.44 in early March, within cooee of where it trades today.
Based on valuation grounds, South32 presides a market capitalisation of roughly $23.89 billion, and has approximately 4.65 billion shares on issue.
The post The South32 share price is closing in on its all-time high. Here’s why appeared first on The Motley Fool Australia.
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More reading
- Goldman Sachs names 3 ASX 200 mining shares to buy today
- 2 strong ASX 200 dividend shares analysts love
- Here are the top 10 ASX mining companies by market cap
- Why is the South32 share price edging higher today?
- The S32 dividend is being paid today. Here’s what you need to know
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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