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.
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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.
