Northern Star Resources Ltd (ASX: NST) is one of Australia's largest gold mining shares. But does it offer one of the biggest dividend yields?
Resource businesses can pay attractive dividends to investors if they pay an attractively-high dividend payout ratio. In other words, do they pay out a large amount of net profit after tax (NPAT) as a dividend?
Dividends can also flow when the relevant resource price rises because it essentially costs the same to dig up a resource out of the ground, whether that commodity price is US$10 higher or lower. Therefore, higher commodity prices can largely turn into profit.
Let's look at the potential Northern Star dividend yield, on current predictions.
Dividend expectations
Looking at the dividend estimates on CMC Markets, Norther Star is expected to pay an annual dividend per share of 22.5 cents in FY22.
Following that, CMC Markets estimates suggest a dividend increase to 25.4 cents per share in FY23.
Finally, in FY24, Northern Star is projected to pay an annual dividend per share of 28 cents.
Furthermore, the ASX gold mining share attaches franking credits to its dividends.
Let's look at each of the expected yields.
In FY22, Northern Star could pay a grossed-up dividend yield of 4.5%.
This could grow to a grossed-up dividend yield of 5.1% in FY23.
By FY24, the Northern Star grossed-up dividend yield could rise to 5.6%.
What this says is that the business is expected to pay a starting yield of more than 4% and keep growing the dividend from there.
Is the Northern Star share price worth buying?
There is more to a potential investment or asset than just how much income it could produce in the shorter term.
Investors should also consider earnings growth and other compelling factors.
Let's look at whether experts believe the gold mining ASX share is an opportunity to buy right now or not.
Credit Suisse rates the business as buy, with a target price of $9.50.
Citi rates Northern Star as a buy, with a price target of $10.80.
Macquarie rates the ASX gold mining share as a buy, with a price target of $10.
The broker Ord Minnett rates Northern Star as a buy, with a price target of $11.10.
Morgans rates the business as a buy, with a price target of $8.50.
So, there are plenty of brokers positive on the miner, at the moment.
