Investors of mining shares might soon be set for a big dividend banquet. The mining sector has outperformed the S&P/ASX 200 Index (ASX: XJO) in the past year by about 5.3% — but according to one broker, the best could be yet to come.
Let's look at the latest analyst forecast…
Are mining shares the pay dirt of the ASX 200?
Analysts at UBS are estimating US$26 billion (AUD$34.6 billion) worth of dividends will be paid by the world's biggest mining companies this earnings season. While not all of this would be allocated to ASX companies and shareholders, there would still be some sizeable gems for Aussies.
Furthermore, the broker explained the iron ore, copper, and nickel price strength had opened the potential for record dividend payments.
The US$26 billion figure forecasted by analysts is shared between Rio Tinto Limited (ASX: RIO), BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), Anglo American, and Glencore. While the last two are not ASX-listed, the others feature in the ASX 200.
UBS basic materials analyst, Miles Allsop said:
We expect BHP to positively surprise due to stronger than expected first-half earnings per share, Anglo to positively surprise by moving to a 60 per cent payout ratio (from 40 per cent historically) and Glencore to slightly disappoint by sticking to the US6c-a-share commitment made in February 2021
Aside from Rio Tinto, Allsop also expects strong production numbers for the first half from Aussie iron ore producers.
Dividends to add more dollar signs
Investors of ASX 200 mining shares could be set to grow their gains even further if UBS' predictions are accurate. This would be on top of an already solid past year of share price appreciation.
For example, Rio Tinto, BHP, and Fortescue have rallied an impressive 33%, 38.5%, and 62.4% respectively. This news follows asset manager Janus Henderson yesterday forecasting a 'dividend bonanza'.