If you're an income investor, then BHP Group Ltd (ASX: BHP) shares are likely to be on your radar.
After all, the mining giant is traditionally one of the biggest dividend payers on the Australian share market.
With that in mind, let's take a look to see what it would take to generate $250 of monthly income from BHP shares.
A monthly income from BHP shares
Firstly, it is worth highlighting that the Big Australian pays dividends every six months. So, investors would need to take these dividends and then redistribute them monthly if they wanted a paycheck each month.
That said, in order to generate $250 monthly income you'll need $3,000 in annual dividends.
According to a recent note out of Goldman Sachs, its analysts are expecting BHP to pay fully franked dividends of US$2.11 (A$3.14) per share in FY 2023 and US$1.70 (A$2.53) per share in FY 2024.
This means that you will need to own 955 BHP shares in FY 2023 or 1,185 shares the following year to generate the desired level of income. Based on the current BHP share price of $42.96, this will mean investments of approximately $41,000 or $51,000, respectively.
If you're fortunate enough to have these funds at your disposal, then you're on your way. But if you don't, I wouldn't let that stop you from aiming for this in the future.
The Australian share market has provided a return of approximately 9.6% per annum over the last 30 years. While there's no guarantee that it will do the same in future, if it were to do so, investing $5,000 into ASX shares each year would turn into $51,000 in just seven years.
At that point, you can switch your focus to income and watch the passive income flow in each month.
