Pilbara Minerals Ltd (ASX: PLS) has certainly come of age over the last 12 months.
After over a decade on the ASX boards, the lithium miner graduated to being a dividend-payer in 2023.
This followed the announcement of a capital framework in 2022, which outlined how the lithium giant intends to spend its surplus cash.
Management revealed that it aims to pay out 20% to 30% of its free cash flow to shareholders. It believes 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 paying its inaugural dividend of 11 cents per share to shareholders in March.
But what's next for the Pilbara Minerals shares? What would happen if you picked up 3,000 units this afternoon.
Will Pilbara Minerals shares offer big dividends in the future?
It is worth noting that opinion is rather divided on both the valuation of Pilbara Minerals shares and its future dividend payments.
For the purpose of this article, we're going to go with what analysts at Citi are saying about both.
As things stand, the broker has a buy rating and $4.60 price target on the company's shares. This is only a touch higher than where they currently trade.
As for dividends, the broker is forecasting the following fully franked payouts:
- FY 2023 – 23 cents per share (11 cents has already been paid)
- FY 2024 – 16 cents per share
- FY 2025 – 21 cents per share
Based on these estimates, if you were to buy 3,000 Pilbara Minerals shares, you would receive the following in dividends:
- FY 2023 – $360 (excluding the interim dividend)
- FY 2024 – $480
- FY 2025 – $630
That's a total of almost $1,500 in dividends between now and the end of FY 2025.
And with the company's shares currently trading at $4.58, you would be required to make a $13,740 investment to pick up the desired number of units.
This bull expects more
It is worth highlighting that Macquarie is far more bullish. In fact, it is expecting a fully franked final dividend of 19 cents per share and an FY 2024 dividend of 30 cents per share. This would mean payouts of $570 and $900, respectively.
In addition, the broker has a $7.70 price target on the company's shares. This suggests that the true value of your 3,000 units would be $23,100. That's $9,360 more than you would have to pay for them at the current market price. Food for thought!
