Lynas Rare Earths Ltd (ASX: LYC) shares are known for many things. For one, Lynas is by far the largest pureplay rare earths company on the ASX, with a market capitalisation of close to $9 billion.
The strategic importance of the company has led to renewed interest in Lynas and its future-facing rare earths operations over the past few years.
Back in March, we covered how Lynas could stand to benefit from the efforts of both the United States and Australian governments to shore up supply chains of critical minerals like rare earths.
But Lynas is also famous for its stellar share price run in recent months and years. Back in early 2020, you could buy one Lynas share for just $1.20. Today, the company has closed at $9.95 a share after hitting an all-time record high of $11.59 back in April.
Lynas shares: where are the dividends?
But one thing Lynas is not known for is its dividends. Unlike many ASX 200 shares, Lynas has never paid a dividend. Back in February, we looked at why this is the case. It's not from a lack of profits for one. That's the usual primary suspect for a lack of dividends on the ASX.
As we covered back then, Lynas brought in $235.3 million in earnings before interest taxes, depreciation and amortisation (EBITDA) over the 2021 financial year. That works out to be around 18.08 cents in earnings per share (EPS).
Now Lynas is a company that is still investing heavily in future growth. Despite the positive earnings of FY21, Lynas still went to investors for a $425 million capital raising. It earmarked these funds for its Kalgoorlie Rare Earths Processing plant, as well as upgrades for its Lynas Malaysia plant.
Because Lynas is investing so heavily in its future capabilities, its management has probably come to the conclusion that paying out a dividend (which nets no returns for a company) is not a wise use of capital at this time.
Now perhaps the picture will change when Lynas reports its FY22 numbers on Friday next week (26 August). If Lynas reporters even higher earnings for FY22, it's possible (although perhaps unlikely) that a dividend could be declared. But we shall have to wait and see.
