Today is a big day for Pilbara Minerals Ltd (ASX: PLS) shareholders.
That's because on Friday, the lithium giant will be rewarding them with its maiden dividend.
The Pilbara Minerals dividend
Late last year, the company unveiled its capital management framework which revealed that it now aims to pay out 20% to 30% of its free cash flow to shareholders.
Management believes that this is a nice balance and leaves it with enough free cash flow to maintain safe and reliable operations, as well as support growth and productivity initiatives.
This ultimately led to Pilbara Minerals declaring its maiden dividend last month when it released its half-year results.
The company's board elected to reward its shareholders with an 11 cents per share fully franked interim dividend. In line with its capital management framework, this represents a 30% free cash flow payout ratio. It is also the equivalent of a $329.8 million return.
After going ex-dividend at the start of this month, this dividend will be hitting the bank accounts of eligible shareholders at some point today.
What's the yield on this dividend?
Based on the current Pilbara Minerals share price of $3.50, this 11 cents per share dividend represents a very attractive 3.15% fully franked yield.
And let's not forget that there's likely to be a final dividend that follows later this year, stretching the yield further.
Goldman Sachs, for example, is forecasting a fully franked full-year dividend of 25 cents per share. This will mean a 14 cents per share final dividend and a full-year yield of 7.15%.
It is also worth noting that Goldman sees plenty of upside in the Pilbara Minerals share price. Although it only has a neutral rating, its price target of $4.90 is 40% higher than current levels.
