BlueScope share price pushes higher amid $438m special dividend

The BlueScope Steel Ltd (ASX: BSL) share price is pushing higher again on Wednesday.

In morning trade, the steel products company’s shares are up almost 1% to $30.06.

Why is the BlueScope share price rising today?

Today’s rise has nothing to do with recent takeover interest and everything to do with capital returns.

According to the release, BlueScope has announced plans to return $438 million in surplus cash to shareholders through an unfranked special dividend.

BlueScope will be rewarding shareholders with $1.00 per share, which is the equivalent of a 3.3% dividend yield at current prices.

The company notes that the surplus cash that is being returned has been generated from recent initiatives. This includes the sale of BlueScope’s 50% interest in the Tata BlueScope joint venture for $167 million, the agreement to sell 33 hectares of land at West Dapto for $76 million, and the ongoing realisation of the residual projects in the BlueScope Properties Group. These are delivering a working capital release of around $200 million over FY 2025 and FY 2026.

Why is it returning capital?

The BlueScope board revealed that it has elected to return this surplus cash to shareholders through an unfranked special dividend because an on-market buy-back is currently not available due to corporate activity and regulatory settings.

It notes that its dividend decision is part of BlueScope’s established capital management framework and is independent of any prior or potential future proposals for the company.

Commenting on the capital return, BlueScope’s managing director and CEO, Mark Vassella, said:

This special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders. With a clear line of sight to the completion of our current significant capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further with the enhanced earnings of the business. The Board will continue to carefully balance investment in growth with shareholders’ returns as cash flows build.

There could be more returns to come in the future. BlueScope highlights that in addition to these recent cash generating initiatives, its free cash generation is set to ramp up over the next 12 to 18 months.

This is expected to be delivered as the company works through the balance of its major investment program, with a reduction in capex of at least $500 million expected in FY 2027 relative to FY 2026.

BlueScope shares will go ex-dividend for this special dividend on 20 January. After which, it is expected to be paid to eligible shareholders next month on 24 February.

The post BlueScope share price pushes higher amid $438m special dividend 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.