Is the Pilbara Minerals' interim dividend at risk of being axed?

Cascading lithium prices might force the board's hand to detonate its next dividend.

| More on:
Two miners standing together.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Pilbara Minerals Ltd (ASX: PLS) shares are regaining some recently lost ground today despite the danger of its next dividend disappearing.

As the second half of hump day rolls over, shares in the lithium producer are finding a comfortable position above $3.46. The gain of 6.1% makes it one of the best performers among lithium companies with a market capitalisation of $500 million or more.

However, it's not all sunshine and rainbows flowing from the quarterly update today. It's quite the opposite for those seeking an income from the Perth-based mining company. Let's take a look into why that might be.

Where art thou dividends?

The news shared by Pilbara Minerals is a double-edged sword. As covered by my colleague, James Mickleboro, the Pilgangoora project owner wants to retain a strong and healthy balance sheet through this downturn in lithium prices.

Between the September and December quarters, Pilbara Minerals saw its cash balance shrink from $3 billion to $2.1 billion. Most of this stemmed from a $758 million tax payment, but it never hurts to have more cash heading into potentially stormy conditions.

Positively, the company appears to be taking a conservative approach to ensure it can maintain its expansion efforts even through a sustained period of lower spodumene prices. The consequence, though, is the need to cut back somewhere else.

Firstly, capital expenditure (CapEx) will be tapered back on 'non-essential new projects' in FY24. This will see CapEx reduce from between $875 million to $975 million down to between $820 million to $875 million.

According to the update, Pilbara Minerals' interim dividend could also be on the chopping block. As noted in the release, "In order to further preserve the Group's balance sheet position while it continues to invest in the P680 and P1000 projects, It is unlikely that a dividend will be paid for the half-year ended 31 December 2023."

The board has yet to make an official decision. However, a determination will be announced alongside the release of its first-half results.

If a dividend were to be paid, the excess cash flow implies a payment of $70 million to $110 million, depending on the payout ratio — ranging from 20% to 30%. Based on the current number of shares outstanding, this would infer 2.3 cents to 3.65 cents per share in dividends.

For context, Pilbara Minerals paid an interim dividend of 11 cents per share in 2023.

No reward for Pilbara Minerals shorters on dividend blow

Despite pulling the upcoming dividend into question, short sellers of Pilbara Minerals shares are getting burned today.

The lithium-languished company sat in pole position as the most shorted ASX share heading into this week. As previously reported, 21.4% of Pilbara Minerals shares were sold short, according to the latest data.

As the Pilbara Minerals share price rips 6% ahead in the afternoon, those shorters would feel worse for wear.

Should you invest $1,000 in CSL right now?

Before you buy CSL shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and CSL wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Are Pilbara Minerals shares too cheap to ignore?

A leading broker has given its verdict on this beaten down lithium miner.

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Materials Shares

Does Macquarie rate James Hardie shares a buy, hold or sell?

The company is set to report FY25 earnings this week.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

Why is the Core Lithium share price jumping 19% today?

Something is getting investors excited. Let's find out what it is.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Financial Shares

Which is better value right now, Soul Patts or Brickworks shares?

Let's dive in and see what the experts have to say.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Materials Shares

Core Lithium shares charge higher on big news

This lithium miner is starting the week strongly. But why?

Read more »

Lion roaring in the wild, symbolising a rising Liontown share price.
Materials Shares

Why did the Liontown share price rip 19% higher today?

This ASX lithium share was the fastest riser of the ASX 200 today.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Why are Fortescue shares charging higher today?

What is getting investors excited today? Let's find out.

Read more »

Business people discussing project on digital tablet.
Materials Shares

What does Macquarie think Liontown Resources shares are worth?

Let's see if analysts think that this lithium miner is in the buy zone or best avoided.

Read more »