Here’s the Rolls-Royce dividend forecast for 2023 and 2024

Edward Sheldon looks at the Rolls-Royce dividend forecast for the years ahead. Are payments to shareholders on the cards now that profits are rising?

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Rolls-Royce (LSE: RR.) shares are a popular investment at the moment. However, they don’t currently pay a dividend as the company has faced significant challenges in recent years. Could a shareholder payment be on the cards now that operational performance is starting to improve? Let’s take a look at the Rolls-Royce dividend forecasts for 2023 and 2024.

Will Royce-Royce start paying dividends again?

Looking at the latest financial data from Refinitiv, City analysts don’t expect Rolls-Royce to reward shareholders with a dividend payment this year. Currently, the dividend forecast for 2023 is zero pence per share. This makes sense as the company recently advised that it was restricted from making payments to shareholders due to some of the conditions on its loans.

It’s a different story for 2024, however. Rolls-Royce has told investors that it’s “committed to resuming shareholder payments” and it seems some analysts believe payments will return next year.

At present, the consensus forecast for 2024 is a distribution of 1.63p per share. At the current share price, that equates to a yield of around 1.1%.

It’s worth noting here that the 2024 forecast has risen a fair bit recently. A month ago, the projection for next year was closer to 1.3p per share. The estimate may rise further now that the company’s performance is improving.

We had a 10-year track record of payments to shareholders prior to the pandemic but had to cease payments in 2020 to protect our balance sheet. We are committed to returning to an investment grade credit rating through performance improvement and to resuming shareholder payments.

Rolls-Royce 2022 results

Be careful with forecasts

A word of warning though. These dividend forecasts for Rolls-Royce should be taken with a pinch of salt.

When a company has cancelled its payout, it’s very hard for investment analysts to project future dividends accurately. Sometimes, their estimates can be way off the mark.

This was illustrated several years ago when Lloyds Banking Group started paying dividends again after several years of no payments. Analysts’ forecasts were way too optimistic at the time and the actual dividends paid by the bank were well below the estimates. This was disappointing for those looking for income.

So, I certainly wouldn’t rely on the forecasts I’ve provided above. We could see Rolls-Royce pay lower dividends than expected or we could see the company pay higher dividends than anticipated.

Right now, it’s difficult to know exactly how much cash the company will pay to shareholders in the years ahead.

Improving fundamentals

I’m optimistic that the company will pay dividends again at some stage in the not-too-distant future though.

Now that Covid-19 is behind us and its profits and free cash flow are on the rise, I think it’s only a matter of time until the company declares a payment for shareholders.

And a dividend is likely to make the stock even more attractive to investors.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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