Will Qantas shares pay a dividend in 2023?

The Qantas Airways Limited (ASX: QAN) share price has been in fine form over the last 12 months.

Thanks to its strong rebound from the pandemic, as you can see below, the company’s shares have soared 25% since this time last year.

So, with Qantas on course to deliver an underlying profit before tax of between $1.35 billion and $1.45 billion for the first half of FY 2023, investors may now be wondering whether a dividend could be paid for the first time in three years.

Will Qantas shares pay a dividend in 2023?

Opinion is divided on whether there will be a Qantas dividend in 2023.

One of the most bullish brokers out there is Goldman Sachs. It currently has a conviction buy rating and $8.20 price target on Qantas shares.

Its analysts believe that the company will be in a position to pay a 10 cents per share dividend in FY 2023. Based on the latest Qantas share price of $6.35, this implies a modest 1.6% dividend yield for investors.

Though, it is worth noting that Goldman then expects Qantas to double its dividend to 20 cents per share the following year. This brings its dividend yield to a more attractive 3.2%.

Share buybacks ‘likely’

Over at Morgans, its bullish brokers have an add rating and $8.50 price target on Qantas’ shares.

However, they are not expecting Qantas to resume its dividend payments any time soon. In fact, the broker has no dividends pencilled in as far out as FY 2025. It appears to believe that share buybacks are more likely than dividend payments due to Qantas’ lack of franking credits. The broker said:

QAN is set to benefit from record earnings in FY23 and we expect further earnings growth through to FY25. During this period, we also forecast QAN to generate strong cashflow. This, along with QAN’s strong track record of maintaining balance sheet strength, leaves us with little doubt that QAN will have no issues funding its upcoming capex spend whilst continuing to return excess capital to shareholders. Given QAN has no franking credits, capital management will likely be in the form of on- market share buybacks going forward.

Time will tell which broker makes the right call. But either way, shareholders look set to benefit from Qantas’ return to form.

The post Will Qantas shares pay a dividend in 2023? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 Scott Phillips.

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