The Glencore dividend forecast for 2024 and 2025 may disappoint income investors

The Glencore dividend forecast suggests that investors shouldn’t expect much passive income from the stock in the next few years.

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Earlier this year, Glencore (LSE: GLEN) shocked investors by announcing a huge cut to its dividend. For 2023, the payout was reduced to just 13 cents per share – down 70% year on year. So, what level of income can investors expect to receive in the years ahead from the blue-chip commodities stock? Let’s take a look at analysts’ dividend forecasts for 2024 and 2025.

Why the cut?

Before I highlight the expected payouts, it’s worth providing a bit of context here.

In recent years, Glencore has been able to pay out some whopping dividends thanks to high commodity prices. For 2022, for example, the total payout was 56 cents per share.

However, recently the company acquired a 77% interest in Canadian miner Teck’s steelmaking coal unit for around $7bn. So, it cut its dividend in an effort to pay down the debt taken on for this deal.

It’s worth noting that large dividend cuts from commodities companies are not unusual. In fact, they’re quite common as payouts are often slashed when commodity prices are low.

Given that dividend payouts can fluctuate heavily, these stocks aren’t ideal for those seeking regular, stable passive income. If one is looking for reliable income, stocks in more stable sectors such as consumer goods, healthcare, and utilities are often a better option.

The latest dividend forecasts

As for the dividend forecasts though, Glencore is currently expected to pay out 15.5 cents per share for 2024 and 20.9 cents for 2025.

At today’s share price of 460p and a GBP/USD exchange rate of 1.27, these estimated payouts equate to yields of 2.7% and 3.6%. So, the yield on the stock today isn’t particularly high.

It’s worth pointing out, however, that analysts’ forecasts can be off the mark at times. Especially in this sector, where commodity prices can swing around wildly. So, the actual dividends could end up being higher than this (or lower).

One other thing worth pointing out here is that these are the payouts that are expected to be declared (not paid) for 2024 and 2025. This company usually pays its final dividend for a year in September of the following year.

Still things to like

Now, just because the dividend isn’t what is used to be doesn’t mean that Glencore shares don’t have appeal. I still think they look interesting as a copper play.

You see, Glencore is one of the world’s largest producers of copper. And in the years ahead, demand for the commodity is likely to be very high due to:

  • The renewable energy transition – copper is essential for wind turbines, solar panels, and power grids.
  • Electric vehicles (EVs) – these use considerably more copper than traditional cars.
  • The data centre buildout – copper is needed for many data centre components including power cables.
  • Defence spending – copper is a key ingredient in a wide range of munitions.

So overall, the outlook for Glencore appears to be attractive.

That said, commodity prices are notoriously unpredictable. There’s always the chance that they could crash in the years ahead. If they did, Glencore’s share price would most likely take a hit.

So risk management is sensible here. This isn’t a stock I’d bet the farm on.

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 no position in any of the shares mentioned. 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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