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Best ASX lithium share to buy: Liontown Resources vs. Pilbara Minerals





The verdict

Overall, while the potential returns may be lower than what’s on offer with Liontown shares, I believe the risk/reward is more compelling with Pilbara Minerals shares. As a result, I think it is the better ASX lithium share to buy now.





Is Pilbara Minerals a better option?

Of these two ASX lithium shares, I suspect that Pilbara Minerals could be the better buy.

It is a lithium mining and exploration company and one of only a small number of major hard-rock lithium producers globally. It operates the 100% owned Pilgangoora Project, which is located just 120km from Port Hedland. It comprises two processing plants with a combined nameplate capacity of 580,000 tpa of spodumene concentrate.

And with Pilbara Minerals announcing its capital management framework late last year, this may bode well for future dividend payments.

In fact, a note out of Citi from this morning reveals that its analysts expect this lithium share to pay fully franked dividends of 24 cents per share in FY 2023, 17 cents per share in FY 2024, and 20 cents per share in FY 2025. This would mean yields of approximately 6%, 4.2%, and 5%, respectively.

And with a buy rating and price target of $4.60, Citi also sees a potential upside of 14% over the next 12 months.