Given the current discussion on dividends and a discussion I had with CJ at the last General Meeting, I've decided to do some analysis of the numbers.
I was aware of the topic of the potential of dividends at the start of the year so I asked CJ about it at the last general meeting. He said (his view, not board view) that a payout ratio of around 50% is a feasible way to reward shareholders. I have therefore run some numbers on that scenario.
I'm not suggesting the company will commence a dividend policy immediately but they are hinting at somewhere down the track in the latest corporate presentation.
So, running some analysis based on my latest cashflow forecast from earlier in the week, a 50% payout ratio would provide for a yield from 6.25% (2017) to 3.35% (2019).
Be wary of the yield trap! Whilst the share issue will dilute over time. Dividends per share will actually grow at a faster rate than dilution! Look at the below!
By my calculations, earnings per share growth from 2018 to 2019 is actually above 30%
That's on expectations/assumptions for P/E that are IMO reasonable. The massive growth in production from 2017 to 2018 is due to the move from 1 auction to 2 auctions ( and the shareholder sentiment following what is looking to be quite reasonable results for the first auction.
Column groups below are IIR analysis, 2017, 2018, 2019.
