Despite what the market may do, it's set to be a good day for South32 Ltd (ASX: S32) shareholders.
The time has come for shareholders to dig into the ASX 200 mining company's latest final dividend.
Here's what you need to know about today's payday.
It's raining dividends for South32 shareholders
Back in August, South32 unveiled its FY22 results. In the process, the ASX 200 miner declared a final dividend of 14 US cents along with a special dividend of 3 US cents.
Pleasingly for shareholders, both of these dividends are fully franked.
South32 has used an AUD/USD exchange rate of 67.65 US cents, so the total is equivalent to roughly 25.13 cents in Aussie dollars.
South32 shares turned ex-dividend for this payment on 15 September. As a result, any South32 shares purchased on or after this date won't be scooping up today's payout.
Unlike its former owner BHP Group Ltd (ASX: BHP), South32 doesn't have a dividend reinvestment plan (DRP). So, shareholders will be receiving today's payment in cash.
Across the financial year, South32 declared total dividends of 25.7 US cents, fully franked. This represents a whopping 272% increase from the total dividends of 6.9 US cents seen in FY21.
This hefty dividend hike was supported by elevated commodity prices, which helped South32 enjoy a four-fold increase in underlying earnings in FY22, hitting US$2.6 billion.
In Aussie dollars, South32 will soon have paid out roughly 37.08 cents per share in dividends this year. At current levels, this puts South32 shares on a monster trailing dividend yield of 10.0%. Adding in franking credits, this yield cranks up to 14.3%.
However, looking ahead, broker Goldman Sachs is forecasting South32 to slash its annual dividends by 44% in FY23 to 14.3 US cents. This represents a prospective forward dividend yield of around 6%.
What's next for the South32 share price?
Earlier this week, Goldman Sachs downgraded its rating on South32 shares from buy to neutral. What's more, the broker cut its 12-month price target on South32 shares by 21% to $3.70, in line with where shares are trading today.
This downgrade came after the broker lowered its forecasts for base metals prices. But on a more positive note, Goldman highlighted South32's supportive dividend yield, share buyback, and compelling long-term base metals growth.
Morgans, on the other hand, is bullish on the ASX 200 miner. The broker has an add rating and a $5.50 price target on South32 shares. At current levels, this implies potential upside of 49% over the next 12 months.
Explaining its positive view, Morgans commented:
Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.
South32 share price snapshot
The South32 share price has bounced around this year and is currently printing a 7.7% fall since the start of 2022.
Despite sitting in the red, South32 has outperformed the S&P/ASX 200 Index (ASX: XJO), which has tumbled 10.7% in the year to date.
However, South32 shares are lagging the Big Australian, with BHP shares experiencing a more muted 4.7% fall so far this year.
