How big will the Pilbara Minerals dividend be next year?

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

Earlier this year, Pilbara Minerals Ltd (ASX: PLS) excited investors by declaring its maiden dividend.

Thanks to the high level of cash it is generating from its lithium operations, the company was able to declare and pay a fully franked 11 cents per share interim dividend.

The question on everybody’s lips now is: “what comes next?”

Where next for the Pilbara Minerals dividend?

Unfortunately, one leading broker believes that the majority of Pilbara Minerals’ FY 2023 payout has already been distributed.

According to a recent note out of Morgans, its analysts are forecasting a fully franked 15 cents per share dividend in FY 2023, which implies a final payout of 4 cents per share.

Based on the current Pilbara Minerals share price of $4.60, this will mean a full-year yield of 3.25% and a final dividend yield of 0.85%.

What about next year?

Looking ahead, Morgans expects weaker lithium prices to lead to the Pilbara Minerals dividend being cut to 9 cents per share. This represents a 1.95% dividend yield based on current prices.

But the broker doesn’t think that should put you off investing. It has an add rating and $5.00 price target on the company’s shares.

Its analysts also see scope for a surprise rebound in lithium prices. If this happens, it could lead to stronger earnings and dividends. The broker advises:

Our base case is for lithium prices to stabilise and plateau before declining to LT levels. However, we do see the potential for prices to be driven higher if the Chinese market is forced to aggressively restock. If this were to happen there would be strong trading opportunities over and above our base case.

Time will tell what happens with lithium prices and ultimately the Pilbara Minerals dividend in the near future.

The post How big will the Pilbara Minerals dividend be next year? 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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