Not much to get excited about now until the release of the H1 financials on the 16th August. This got me thinking, what can we expect as an interim dividend ?
Last year was a 6cps dividend based on a H1 free cashflow of $180m. Free cash flow this half was up to $226m, so on a pro-rata basis that might imply an increase to 7.5cps ? However, the market environment was much more uncertain last year and Iluka had a new MD who was finding his feet, so they held back a lot of the cash to the final dividend. Will they be more willing to let go of some of the cash at the interim this time ?
Under David Robb, the broad policy was to pay~40% of free cashflow to investors (though I don't know if the same policy still applies under Tom O'Leary). Applying this rule of thumb, 40% of $226m = ~$90m, and with 422m shares on issue gives a potential H1 dividend of 21.4cps, so in theory there is scope for Iluka to comfortably increase the interim dividend (remembering that back in 2011 the interim dividend was 0.20cps and in 2012 it was 0.25cps).
If nothing else, the final dividend this year should be looking quite good. Anyone seen any broker forecasts for 2018 dividends ?
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