Silver lining: Mineral Resources shares to pay interim dividend

Mineral Resources just revealed an impressive payout.

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Key points

  • It was a very strong half-year result for Mineral Resources
  • Thanks to the improved earnings, the board declared a fully franked dividend per share of $1.20
  • Management believes the business has laid the foundations for strong growth in the coming years

Mineral Resources Ltd (ASX: MIN) shares have not reacted positively in response to the S&P/ASX 200 Index (ASX: XJO) mining share's FY23 half-year result. But, the dividend could provide some comfort to shareholders.

For the readers that haven't seen the result yet, Mineral Resources' revenue was up 74% to $2.35 billion. Operating cash flow increased 333% to $281 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 503% to $939 million and underlying net profit after tax (NPAT) jumped 1,175% to $387 million.

The ASX 200 mining share said that its iron ore division benefited from improved achieved prices, contributing to stronger earnings. It shopped a total of 8.7 mt of iron ore during the period.

The lithium segment reported record earnings thanks to "strong pricing and increased volumes."

Mineral Resources dividend

The company's board decided that after the strong result, it would pay an interim dividend of $1.20 per share, fully franked. It didn't pay an interim dividend last year. That compares to diluted earnings per share (EPS) of $2.02, which means it will have a dividend payout ratio of 59.4%.

Mineral Resources revealed that the dividend is due to be paid on 30 March 2023 to shareholders on the register at 10 March 2023.

At the current Minerals Resources share price, the upcoming dividend amounts to a grossed-up dividend yield of 2.1%, with more growth expected in the coming results.

Positive outlook

The Mineral Resources managing director Chris Ellison said:

We have locked in substantial growth in each of these business divisions for the next five years and built the foundations that will set up MinRes for the next 50 years.

This half has seen us take the business from a mining services contractor and upstream miner to a leading downstream supplier of lithium to global auto manufacturers.

In lithium, we are expanding our fully integrated battery chemicals business through the restructure of the joint venture with Albemarle. Owning the rock and converting it into battery chemicals, sold by MinRes, means we capture more margin of the value chain.

In iron ore, we are progressing plans to unlock stranded deposits at our game-changing Onslow Iron project, which will transition us to a low cost, long-life iron ore producer.

In energy, we are pursuing opportunities to secure reliable, low-cost natural gas to power our operations, transition away from diesel and coal-fired power and unlock downstream potential.

In mining services, our innovative and cost-effective solutions in crushing, haulage and port services are gaining international attention and potentially leading to new options offshore.

We're also taking MinRes to the world by exploring options outside of Western Australian across the business.

Mineral Resources share price snapshot

Despite today's decline, the Mineral Resources share price is up more than 25% over the past six months.

Motley Fool contributor Tristan Harrison 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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