TerraCom share price rockets on 900% dividend upgrade

The miner has decided to update its dividend policy and distribute more of its profit to shareholders.

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Key points

  • TerraCom has increased its dividend by 900% 
  • The coal miner will pay 10 cents per share for the 12 months to 30 June 2022 
  • It will also update its dividend policy to share 60% to 90% of net profit after tax with shareholders 

The TerraCom Ltd (ASX: TER) share price is going skywards this afternoon, up 13% to $1.11 after the coal miner revealed a nine-fold increase in its dividend.

The company declared a final dividend of 10 cents per share for the 12 months to 30 June 2022 today.

This comprises an ordinary dividend of 7.5 cents per share and a special dividend of 2.5 cents per share. The payment will be unfranked.

The last time TerraCom paid a dividend was in 2019. That was an interim dividend of 1 cent per share unfranked.

Why has the TerraCom dividend gone up so much?

The company has decided to update its dividend policy and distribute more of its profit to shareholders.

TerraCom will adopt a new dividend payout ratio of 60% to 90% of net profit after tax (NPAT).

The company will pay dividends on a quarterly basis and those dividends will be franked.

The ASX mining share will go ex-dividend on 2 September. Shareholders will receive the dividend on 19 September.

TerraCom is reviewing its overall capital management program "with the intention to further improve working capital in the business and tax effective ways to make returns to shareholders".

The miner said the review "will contemplate numerous value accretive initiatives".

What did management say?

Non-executive TerraCom chair, Graeme Campbell, said:

On behalf of the Board and Management, I am extremely pleased with the ongoing consistent performance of the Company which has enabled this dividend to be declared and an update to our distribution policy.

We have a strong forward outlook on the coal market and look forward to providing income and capital to our shareholders on a regular basis.

TerraCom is an emerging resources explorer with a large portfolio of operating assets in Australia and South Africa.

Motley Fool contributor Bronwyn Allen 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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