One of the most popular options for income investors on the Australian share market is the BHP Group Ltd (ASX: BHP) dividend.
And it really isn't hard to see why.
Every year, the Big Australian shares a decent portion of its free cash flow with its lucky shareholders. This has led to tens of billions of dollars being paid to them in recent years.
The good news is that this looks set to be the case again in the future, with plenty more dividends expected to line the pockets of BHP shareholders in the coming years.
And while big dividends are nice, bigger dividends are better. So, will the BHP dividend be increasing in the future?
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Where next for the BHP dividend?
First things first, it should be noted that it is already widely accepted that the BHP dividend will almost certainly be lower year on year in FY 2023.
After all, during the first half of the financial year, the mining giant's interim dividend was cut by 40% to 90 US cents due to lower commodity prices and inflationary pressures.
Pleasingly, though, investors can look forward to a bigger final dividend for FY 2023 thanks to recent improvements in the price of its commodities.
For example, Goldman Sachs is forecasting a fully franked US$1.20 per share final dividend in August. This will bring BHP's full-year dividend to US$2.11 per share, which equates to A$3.11 per share at current exchange rates. It also represents an attractive 6.5% dividend yield based on the current BHP share price.
Unfortunately, Goldman isn't expecting the BHP dividend to increase from here. It is forecasting fully franked payouts of US$1.70 (A$2.50) per share in FY 2024 and US$1.21 (A$1.78) per share in FY 2025. This will mean yields of 5.4% and 3.9%, respectively, for investors.
This is based on its expectation that BHP's free cash will soften over the next couple of years and put pressure on its payouts.
Though, it is worth remembering that commodity prices are notoriously hard to predict. Any surprises (positive and negative) to the iron ore price, for example, could have a major impact on Goldman's earnings and dividends estimates.
