The slimmer South32 dividend is being shelled out today. Here’s the lowdown

It is a good day to be a South32 Ltd (ASX: S32) shareholder.

That’s because today is the day that the mining giant will be rewarding them with a dividend payment.

The South32 dividend

In February, South32 released its half-year results for the six months ended 31 December.

Unfortunately, it wasn’t a great six months for the miner due to weaker commodity prices and inflationary pressures on costs.

This saw South32 report an 8% decline in revenue to US$3.7 billion and a sizeable 27% reduction in its underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) to US$1.36 billion.

As you might expect, this had an impact on its interim dividend. The South32 board elected to cut its dividend by almost 44% to 4.9 US cents per share. This equates to 7.3 Australian cents at current exchange rates.

And based on the current South32 share price of $4.27, this represents a 1.7% dividend yield.

What’s next?

The good news is that analysts are expecting the South32 dividend to recover strongly in the coming years.

For example, according to a note out of Citi, its analysts are forecasting fully franked dividends per share of 27 cents in FY 2023, 32 cents in FY 2024, and 35 cents in FY 2025. This will mean yields of 6.3%, 7.5%, and 8.2%, respectively.

In addition, Citi believes there’s plenty of room for the South32 share price to push higher from current levels.

Its analysts have a buy rating and $5.05 price target on them. This implies potential upside of 18% for investors over the next 12 months.

All in all, this could make South32 a top option for income investors that are looking for exposure to the mining sector.

The post The slimmer South32 dividend is being shelled out today. Here’s the lowdown 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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