Glencore (LSE:GLEN) is one of the FTSE 100 heavy hitters. It’s not only one of the largest in the index by market cap, but also has a record of paying out good dividends when profits are high. Given the current dividend yield of 7.17%, it’s led me to want to check what analysts think the future could be like. Here are the current market expectations for Glencore dividends.
Taking the current year
First let’s just recap how Glencore typically pays out to shareholders. When the preliminary full-year results are released each February, a base dividend amount is confirmed. A variable top-up is added on, based on the previous year’s performance. This is paid in two instalments (usually split evenly), with one paid in May and the other in September.
On top of this, special top-up dividends can be paid. This can be related to better-than-expected finances during a year, or other things such as selling off a business division. The company can also conduct share buyback programmes (towards which it recently allocated $1.5bn) and other initiatives.
Given that we’re now in March, we know that the 2023 proposed dividend is $0.44 per share. This is split into two $0.22 instalments. We don’t know if any special dividends will be paid later this year, but I’m not going to count on it. If it does happen, that’s a bonus!
If I take the current share price of £4.52 (and convert the $0.44 to £0.37), I get a dividend yield of 8.18%. It does assume that I buy at this share price. Given that I’m unable to purchase it today, my yield could be lower or higher based on share price movements.
Looking further ahead
At the moment, the forecast for 2024 is a payment of $0.56, again divided by two. Using my exchange rate calculations, this is £0.46. Taking the current share price, the dividend yield would jump to 10.17%!
I think part of the reason why the dividend forecasts are rising is due to the favourable trading circumstances. 2022 was a great year, with adjusted EBITDA up a whopping 60% over the past year. Going forward, I feel it’s diversified enough in operations to keep this momentum going.
I do note the risk associated with the China reopening. Higher demand from this part of the world would be great for Glencore. However, I’m not convinced that it’s going to be an easy road. The power the government there has over shutting borders and controlling people could negatively impact Glencore this year.
The Glencore share price is down 10% in the past year, but up 21% over the past five years. It’s a volatile stock to hold, but with the generous dividend payments expected, it does appeal to me. I’m going to put the company on my watchlist to see how it performs in coming months.
