Last month Pilbara Minerals Ltd (ASX: PLS) revealed that it would be paying its inaugural dividend in 2023.
The lithium giant announced the establishment of a capital management framework in response to favourable market conditions and strong operating margins.
The company advised that the capital management framework is designed to establish an appropriate structure that prudently allocates available capital between investment into the existing business, sustainability commitments, strategic growth opportunities, as well as the provision of sustainable returns to shareholders.
The sum of the above is a target dividend payout ratio of 20% to 30% of free cash flow.
In light of the above, investors may be wondering just how big the Pilbara Minerals dividend will be in 2023.
Let's take a look at what a couple of analysts are tipping the lithium miner to pay.
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How big will the Pilbara Minerals dividend be in 2023?
According to a note out of Goldman Sachs, its analysts are expecting Pilbara Minerals to generate free cash flow of $1,663.7 million in FY 2023.
From this, the broker expects the company to pay a fully franked 17.4 cents per share dividend, which represents a 30% payout ratio.
Based on the current Pilbara Minerals share price of $4.59, this will mean a 3.8% dividend yield for investors.
Though, Goldman acknowledges that it may not stop there with its capital management, commenting: "We expect top end payouts still generate excess cash, funding further growth or possible cap. mgmt. extensions."
Even bigger dividends
Analysts at Macquarie believe the Pilbara Minerals dividend could be significantly larger in 2023. In fact, the broker has pencilled in a dividend almost double what Goldman is forecasting at 34 cents per share.
If this forecast proves accurate, it will mean a very generous yield of 7.4% for investors.
Time will tell which broker makes the right call. But whatever happens, shareholders look set to receive a nice bonus next year.
