Here’s why the South32 (ASX:S32) share price has soared 25% in a month


While the S&P/ASX 200 Index (ASX: XJO) has struggled to hold ground, the South32 Ltd (ASX: S32) share price has been surging ahead.

The mining outfit shares have zoomed by more than 25% since this time last month. A stark contrast when compared to the benchmark index which has shed around 1% over the same timeframe.

Let’s take a look at what is driving these gains for South32 shares.

South32 benefits from rising commodity prices

Investors have been buying up South32 shares in 2022 as the aluminium price has charged higher in recent times.

The geopolitical tensions between Ukraine and Russia have led to a general lift across the board in commodities prices.

When looking in particular at South32’s main export, aluminium is currently fetching for US$3.85 per kilogram. That represents a gain of 23.38% in the past month, and just 8% off its all-time high of US$4.06 achieved yesterday.

In addition, the company reported a strong performance across key metrics in its FY22 half-year results.

Finishing the period with a net cash of US$975 million, the board opted to considerably bump up its dividend to shareholders.

A fully-franked interim dividend of US 8.7 cents per share was declared, reflecting a massive 621% increase from H1 FY21.

Management noted that the latest dividend equates to a payout ratio of 40% of cash earnings, in line with its dividend policy.

With the South32 share price set to trade ex-dividend on Thursday 10 March, investors might want to jump in.

South32 will pay the interim dividend to eligible shareholders approximately 4 weeks away on 7 April.

It is also worth noting that there is a capital management program that has been active since FY18. This returns excess capital efficiently through an on-market share buyback.

The board further expanded its capital management program by US$110 million to US$2.1 billion, leaving US$302 million to be returned by 2 September 2022.

It has been a strong 12 months for South32 shares, climbing by more than 80%. In 2022 alone, its share price is up almost by 30%, reflecting positive investor sentiment in the company.

Based on today’s price, South32 presides a market capitalisation of roughly $24.07 billion and has approximately 4.65 billion on issue.

Source: Read More

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