How big will the South32 dividend be in 2023?

Where is the South32 dividend heading?

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A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall

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If you’re looking for big dividends, then South32 Ltd (ASX: S32) shares could be worth a closer look.

It has been tipped to reward its shareholders with some big dividends in the coming years.

What are analysts saying about South32 and its dividend?

According to a recent note out of Citi, its analysts are very bullish on South32 shares.

In response to the company’s strategy update at the end of last month, the broker has put a buy rating and $5.50 price target on its shares.

Based on the current South32 share price of $4.16, this implies potential upside of 32% for investors over the next 12 months.

But it gets even better. Citi is forecasting a fully franked 38 cents per share dividend in FY 2022 and a fully franked 40 cents per share dividend in FY 2023.

This implies huge yields of 9.1% in FY 2022 and 9.6% in FY 2023 for income investors.

What did the broker say?

Citi believes that the South32 share price is trading at a very attractive level compared to peers and highlights its exposure to in-demand metals.

The broker commented:

S32 held a strategy update today and there was little to change baseline forecasts save for higher FY23/24 capex. Costs pressures are evident – but are industry not company specific. S32 has production growth, trades at a discount to DCF and on low valuation multiples. What’s not to like compared to peers. While China near term commodity demand is a concern, the midterm outlook for key S32 metals is robust enough.

All in all, this could make South32 one to consider if you’re on the lookout for big dividends.

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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