The Australian share market is among the most generous in the world, with a good portion of companies on the S&P/ASX 200 Index (ASX: XJO) rewarding their shareholders with dividends each year.
One popular share that has bucked the trend is A2 Milk Company Ltd (ASX: A2M). In the seven and a half years that it has traded on the ASX boards, the infant formula company's shares have never provided investors with a dividend.
That's despite the company sitting on a mountain of cash. At the end of FY 2022, it had NZ$816.5 million in its bank account.
Image source: Getty Images
When will A2 Milk shares pay a dividend?
The good news is that there's reason to believe that A2 Milk shares could pay a dividend in the not so distant future.
In fact, management hinted that this could be the case last year. It said:
The Board is actively reviewing capital management initiatives, including a potential share buy-back.
Since then, the company has launched a NZ$150 million on-market share buy-back. Which, as of its last update, has seen the company acquire and retire approximately 13.5 million shares. These shares currently have a market value of $90.7 million, which means there's still plenty more buying to come.
Back to dividends, according to a recent note out of Macquarie, its analysts believe a dividend could be coming in FY 2024.
Its analysts are anticipating a maiden dividend of 12.4 cents per share that year. Based on where A2 Milk shares are currently trading, this represents a modest 1.7% dividend yield.
Though, it is worth acknowledging that Macquarie isn't particularly positive on the company despite the prospect of a maiden dividend. It currently has an underperform rating and $4.25 price target on its shares.
All in all, 2023 might be a little too soon for a dividend, but 2024 seems entirely possible.
