Last year was a good one for income investors who owned Pilbara Minerals Ltd (ASX: PLS) shares.
In February 2023, the company declared its maiden dividend and then in August it followed this up with a bumper final dividend.
This followed the establishment of its capital management framework, which revealed that the lithium miner will aim to pay out 20% to 30% of its free cash flow to shareholders.
As a reminder, this led to Pilbara Minerals declaring an 11 cents per share fully franked interim dividend with its half-year results and then a 14 cents per share fully franked final dividend with its full-year results.
This brought its total dividends to 25 cents per share, which represents a fully franked 6.5% dividend yield based on its current share price. It also represents a total return of approximately $750 million.
Unfortunately, due to a collapse in lithium prices since then, the company elected not to declare an interim dividend with its most recent half-year results.
The company's CEO, Dale Henderson, said:
To further reinforce the balance sheet, prudent steps were undertaken to further preserve capital including the decision to withhold any interim dividend payment.
But what about the future? Will there be more dividends to come from Pilbara Minerals in the coming years? Let's now take a look at what analysts at Goldman Sachs are forecasting for the lithium miner.
Pilbara Minerals dividend forecast
According to a recent note, Goldman Sachs believes that the company is unlikely to pay a dividend with its full-year results in August. This is due to its weakening balance sheet. It said:
PLS' net cash declined to A$1.4bn (from ~A$1.8bn) and has almost halved over the last 6 months (partly on catch up FY23 tax in the Dec-23 quarter). As a result, we see a FY24 final dividend as increasingly unlikely (prior GSe ~A2cps) given capital spend, realised lithium pricing challenges, and PLS having already deferred non-essential spend/the 1H dividend to preserve a balance sheet advantage (though expect dividends to return with the FY25 interim result).
In FY 2025, the broker believes the company will be in a position to pay a 3 cents per share dividend. This equates to a dividend yield of just 0.8%.
After which, the broker is expecting dividends per share of 6 cents in FY 2026, 7.4 cents in FY 2027, and then 8 cents in FY 2028. This will mean yields of 1.55%, 1.9%, and 2.1%, respectively.
Overall, unless there's a surprise rebound in lithium prices, it looks unlikely that Pilbara Minerals shares will be providing dividend yields like in FY 2023 for some time.
