If you've been waiting for an opportunity to buy BHP Group Ltd (ASX: BHP) shares, then you could be in luck.
That's because one leading broker believes that short-term jitters could be uncovering long-term value for investors.
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BHP shares looking attractive
According to a note out of Morgans, its analysts were reasonably pleased with BHP's recent quarterly update. The broker commented:
BHP posted its 3Q23 operational result. Largely in-line with our estimates and close to consensus.
In response to the result, the broker has reiterated its add rating on the Big Australian's shares with a slightly trimmed price target of $50.40. Based on where they currently trade, this implies potential upside of almost 15% for BHP shares over the next 12 months.
Morgans believes that recent weakness has created a buying opportunity for patient investors. It explained:
Recent weakness is starting to uncover some further value in BHP. On a purely short-term basis (3-6 months) we see further external factors that could maintain volatility in BHP's share price and create some attractive buying opportunities. While on a longer term basis we expect BHP to firm towards our A$50.40 Target Price. We maintain our ADD rating.
Big dividends ahead
It is also worth noting that Morgans isn't just expecting strong gains from BHP shares. The broker also sees potential for some very attractive dividend yields in the near term.
For example, its analysts are forecasting a fully franked dividend of US$1.95 per share in FY 2023 and then US$2.52 per share in FY 2024. Based on the latest BHP share price of $44.00 and current exchange rates, this will mean yields of 6.7% and 8.7%, respectively.
Overall, this means that if Morgans is on the money with its recommendation, investors stand to receive a total return in the region of 22% between now and this time next year. Not bad!
