How does the BHP (ASX:BHP) dividend compare to its sector?

We stack up BHP’s dividend against its rivals.

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The BHP Group Ltd (ASX: BHP) dividend has been a talking point over the years, rewarding shareholders with consistent payouts. This comes as the world’s second-largest miner has enjoyed bumper profits, particularly from the surging iron ore spot price.

Nonetheless, we take a look to see how the BHP dividend stacks up against its peers.

How does the BHP dividend compare to its sector?

BHP is scheduled to pay a final dividend of US$2.00 (A$2.74) per share to eligible investors on 21 September. Coupled with its interim dividend of US$1.01 (A$1.31), this brings the total FY21 dividend to US$3.01, a 151% increase on FY20.

Based on the closing BHP share price of $42.19 yesterday, this implies a juicy dividend yield of 9.6%.

In comparison, Rio Tinto Limited (ASX: RIO) is set to give its shareholders $7.60 per share on 23 September. The FY21 interim dividend along with the previous 2H FY20’s $5.17 payment, translates to a total dividend payment of $12.77.

The Rio Tinto share price finished yesterday at $110.69, which equates to a trailing dividend yield of 11.5%.

And, lastly, Fortescue Metals Group Limited (ASX: FMG) is on track to distribute a final dividend of $2.11 per share, payable on 30 September. The company’s interim dividend for the FY21 period came to $1.47 apiece. In total, the full-year dividend amounts to $3.58.

Calculating using the last price of $18.57 for Fortescue shares, this is a mammoth dividend yield of 19.2%. It’s also worth noting that the company’s shares dropped a sizeable 10.94% yesterday after going ex-dividend.

Looking at all 3 miners’ dividend yields, the BHP dividend is ranked the lowest. Yet while investors may opt for Rio Tinto or Fortescue, it’s also imperative to consider share price movements.

BHP shares have jumped 16% higher over the last 12 months, while Rio Tinto and Fortescue shares have moved up 15% and 6%, respectively.

Are BHP shares a buy?

A recent broker note from Macquarie cut its rating on BHP shares by 3.3% to $58.00. On the other hand, Morgans had a different tone, adding to its outlook by 0.9% for a bearish price of $45.90.

However, Goldman Sachs released a report noting that BHP delivered an in-line but still strong FY21 result. The global investment house said its key focus points surrounded the oil merger with Woodside Petroleum Ltd (ASX: WPL), the approval of the Jansen potash project and the listing unification.

BHP commands a market capitalisation of roughly $124.4 billion, making it the third-largest company on the ASX.

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

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

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Motley Fool contributor Aaron Teboneras 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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