Banking on the South32 (ASX:S32) dividend? Here's what you need to know

The South32 dividend received a much welcomed boost last week…

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Key points
  • South32 delivered a robust first half result for the 2022 financial year
  • Growth across key metrics led the Board to declare a bumper interim dividend of US 8.7 cents per share
  • Eligible shareholders can expect to receive payment on 7 April 

The South32 Ltd (ASX: S32) share price has edged higher since announcing its FY22 half year results last Thursday.

The mining outfit delivered strong earnings growth along with a bumper dividend which pleased investors.

Although at yesterday's market close, South32 shares finished 0.22% lower to $4.56, they are around 2.5% higher since 17 February. This is when the diversified metals miner released its results to the ASX.

Miner holding cash which represents dividends.

Image source: Getty Images

What's the details with the South32 dividend?

In the half year report for the 2022 financial year, South32 reported strong performance across key metrics.

In summary, group statutory profit after tax increased by US$979 million to US$1,032 million in H1 FY22. The company benefited from portfolio changes completed in FY21, as well as a broad recovery in commodity prices.

Underlying earnings jumped by US$868 million to US$1,004 million through higher average realised prices for commodities, particularly metallurgical coal. The latter attributed US$526 million over the period to South32's coffers.

The group also achieved a US$704 million increase in free cash flow from operations, excluding EAI, to US$840 million.

Overall, the company finished the first half with a net cash of US$975 million, up from US$406 million in the prior year.

The Board declared a fully franked interim dividend of US 8.7 cents per share. This represents a 621% jump from the US 1.4 cents declared in H1 FY21.

Management noted that the latest dividend equates to a payout ratio of 40% of cash earnings.

The company's dividend policy is to distribute a minimum 40% of its cash earnings in any 6 month period.

It is worth noting that there is a capital management program that has been active since FY18. This returns excess capital efficiently through an on-market share buyback.

The Board further expanded its capital management program by US$110 million to US$2.1 billion, leaving US$302 million to be returned by 2 September 2022.

When can South32 shareholders expect payment?

South32 will pay the interim dividend to eligible shareholders approximately 6 weeks away on 7 April.

To be eligible for the latest dividend, you'll need to own South32 shares before the ex-dividend date on 10 March. This means if you want to secure the dividend, you will need to purchase South32 shares on or before 9 March.

In case you are wondering, the company is not offering a dividend reinvestment plan (DRP) to shareholders.

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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