The Motley Fool

The ASX stock expected to deliver a special dividend next month

ASX investors on the hunt for bumper dividend payouts during next month’s profit reporting season will want to focus on the mining sector as these stocks are probably the most cash generative businesses on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.

What’s more, it isn’t only the mining giants like BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) that are well placed to reward shareholders with a cash splash.

Coal miner Whitehaven Coal Ltd (ASX: WHC) is tipped as another prime candidate that will titillate shareholders with dividend gifts next month following its quarterly production update yesterday.

Special dividend galore

The miner is likely to post its second record profit result in August and its managing director Paul Flynn promised that Whitehaven won’t sit on cash, according to the Australian Financial Review.

This suggests another bumper capital return to shareholders even as Whitehaven looks to build two coal mines over the next decade. Mr Flynn said he is very willing to use debt to fund capex, and that probably makes a lot of sense as the cost of debt is lower than the cost of equity.

Whitehaven paid two special dividends worth 18 cents a share over the last year and that’s on top of its regular handouts.

Macquarie Group Ltd (ASX: MQG) thinks the miner could declare another special dividend next month and is urging investors to buy the stock.

“WHC reiterated its dividend payout policy of 25%-50%. However, given delays for Vickery project approvals, strong free cash flow and a well-managed balance sheet, we believe there is scope for a special dividend,” said the broker.

“We have forecast a final dividend of A$0.27, which includes a $A0.12 base dividend and a A$0.15 special.”

Another special dividend candidate

But Whitehaven isn’t the only one with a track record of paying a special dividend. Diversified miner South32 Ltd (ASX: S32) is another that I think could cough up a special dividend, which would be its third since it spun-out of BHP.

While some analysts believe there’s no earnings upgrade potential for the stock, few would argue that it’s spitting out more cash from operations than it needs.

Given where interest rates are heading, I view any company that can generate a high and sustainable yield in good light.

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. The first two currently offer fat, fully franked yields. The last is a surprising REIT offering you the benefits of being a landlord with none of the hassle! You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Macquarie Group Limited, and South32 Ltd. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!