It has been a great day to be a BHP Group Ltd (ASX: BHP) shareholder. This morning, the mining giant revealed that it will be rewarding its shareholders with a record interim dividend.
This follows the release of a better than expected half year result this morning.
What happened during the first half?
In case you missed it, thanks to higher sales prices across its major commodities and near record production at WAIO, BHP reported a 27% increase in revenue from continuing operations to US$30,527 million and a 57% jump in underlying profit to US$9,715 million.
This came in well-ahead of expectations. As did its net operating and free cash flow, which came in at US$13.3 billion and US$9.7 billion, respectively, including discontinued operations.
Goldman Sachs commented on its cash flows. It said: "Operating cash flow of US$13.3bn, above GSe at US$10.8bn, on the stronger result and lower than expected cash tax. Cash capex and exploration was US$3.7bn vs our US$4.1bn estimate. FCF totaled US$9.7bn compared to our US$6.6bn estimate."
The BHP dividend
In light of this stronger than expected cash flow, the BHP interim dividend was increased to a level that smashed expectations.
BHP declared a record fully franked interim dividend of US$1.50 per share, which compares favourably to Goldman's estimate of US$1.27 per share and the consensus estimate of US$1.31 per share.
This means that a total of US$7.6 billion will be returned to shareholders for the half, which represents a 78% payout ratio. It also means that total shareholder returns have now climbed to more than US$22 billion over the past 18 months. Maybe BHP should change its name to ATM?
When will this dividend be paid?
The interim BHP dividend will be paid to eligible shareholders next month on 28 March.
To be eligible, you'll need to own the mining giant's shares before they go ex-dividend on 24 February. This means you'll need to be on its share registry by the close of play on 23 February.
Based on the current BHP share price of $47.99, this interim BHP dividend alone equates to a fully franked 4.4% yield.
