The BHP Group Ltd (ASX: BHP) dividend is one of the most popular options on the Australian share market for income investors.
And it isn't hard to see why! BHP traditionally shares a good portion of its free cash flow with investors, leading to above-average fully franked dividend yields.
But will this remain the case in the coming years? Let's look to see what analysts at Goldman Sachs are predicting for the BHP dividend in the coming years.
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Where is the BHP dividend heading?
Firstly, as a reminder, in FY 2022 the Big Australian rewarded shareholders with total fully franked dividends of US$3.25 (A$5.02) per share.
However, due to weakness in the iron ore price, the petroleum demerger, and a softer copper price, Goldman Sachs is expecting a sizeable reduction in the BHP dividend in FY 2023.
Its analysts are currently forecasting a US$1.60 (A$2.47) per share dividend for the 12 months. Based on the current BHP share price of $40.48, this implies a fully franked 6.1% dividend yield for investors.
The following year, in FY 2024, the broker is forecasting a fully franked US$1.33 (A$2.05) per share dividend. This will mean a yield of almost 5.1% for investors that year.
Another cut is expected in FY 2025. This is being driven by its expectation for further weakness in iron ore prices. Goldman Sachs is forecasting a US$1.14 (A$1.76) per share dividend for the period, which represents a 4.35% fully franked dividend yield.
Unfortunately, the unwelcome trend continues in FY 2026, with the broker expecting another cut to the BHP dividend. It is forecasting a US$1.02 (A$1.57) per share dividend, which implies a 3.9% yield. The good news, though, is that Goldman is calling a bottom to the BHP dividend this year and expects a long-awaited increase to follow in FY 2027.
The broker has pencilled in a fully franked US$1.06 (A$1.63) per share dividend for that year, which equates to a 4% yield.
All in all, this breaks down as follows:
- FY 2023 – 6.1% yield
- FY 2024 – 5.1% yield
- FY 2025 – 4.35% yield
- FY 2026 – 3.9% yield
- FY 2027 – 4% yield
Though, it is worth remembering that a lot can change in a short period in the resources sector. Just look at the coal price. Nobody wanted to touch the stuff a year ago and now it is commanding sky high prices and underpinning huge dividend payments for coal miners.
