Should you buy BHP (ASX:BHP) shares for its dividend in July?

Is this mining giant a buy for its dividends?

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miner giving 'ok' sign in front of mine

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One of the most popular shares in the resources sector is BHP Group Ltd (ASX: BHP).

This is due to the Big Australian’s world class operations and its generous dividend policy.

In light of the latter, I thought I would take a look to see what analysts are saying about the BHP dividend in July.

Should you buy BHP shares for its dividend in July?

One leading broker that believes BHP shares are trading at an attractive level for investors is Goldman Sachs.

According to a note, its analysts have responded to its FY 2021 production update by retaining their buy rating and lifting their price target slightly to $57.70.

Goldman is forecasting dividends per share of 289 US cents in FY 2021, 446 US cents in FY 2022, and then 400 US cents in FY 2023.

Based on the current BHP share price and the latest exchange rates, this will mean fully franked yields of 8%, 12.3%, and 11%, respectively, over the coming years.

Goldman commented: “We forecast a c. 40% increase in EBITDA (60-70% margins) and 55% increase in FCF in FY22 (equating to c. 15% FCF yield), driven by our positive view on iron ore, met coal, copper and oil prices. We forecast a dividend yield of 11-12% in FY22 & FY23. We forecast a final dividend of US$1.88/sh (85% payout) in August.”

What else is being said about the BHP dividend?

Goldman Sachs isn’t the only broker that expects a big BHP dividend in FY 2021.

According to a note out of Macquarie, its analysts are forecasting dividends of $3.72 per share in FY 2021 and then $3.61 in FY 2022. Based on the current BHP share price, this will mean fully franked yields of 7.4% and 7.2%, respectively.

This morning Macquarie put an outperform rating and $60.00 price target on BHP shares. This implies potential upside of approximately 20% over the next 12 months excluding dividends.

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

Before you consider BHP, you'll want to hear this.

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

The online investing service he’s run for nearly 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 are better buys.

*Returns as of May 24th 2021

Motley Fool contributor James Mickleboro 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 Bruce Jackson.

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