When it comes to generating passive income from ASX shares, there a few options more popular than BHP Group Ltd (ASX: BHP) shares.
Every year, the Big Australian rewards its shareholders by paying them big dividends.
And while the amount that is returned will vary depending on commodity prices in a particular year, when times are good, this can amount to tens of billions of dollars being returned to shareholders in total.
The good news for passive income seekers is that times are relatively good right now. Sure, commodity prices aren't as strong as they were a couple of years ago, but they are high enough to underpin some generous payouts from the mining giant. But just how generous?
How much passive income will BHP shares generate?
For our example, we're going to imagine that we have $10,000 waiting in the wings, ready to be invested in BHP shares.
Based on its current share price of $44.05, if you were to invest that amount, you will end up owning 227 shares.
Now onto the passive income. A recent note out of Goldman Sachs reveals that its analysts are forecasting fully franked dividends per share of US$2.05 in FY 2023 and then US$1.63 in FY 2024.
This currently equates to A$3.04 per share and A$2.42 per share at current exchange rates, which represents dividend yields of 6.9% and 5.5%, respectively.
Based on the above, your $10,000 investment would yield passive income of approximately $690 in FY 2023 and $550 in FY 2024. Though, it is worth noting that BHP has already paid its interim dividend this year.
But the returns may not stop there. Goldman Sachs has a buy rating and $49.90 price target on BHP's shares.
If its shares were to reach that level, your $10,000 investment would be valued at approximately $11,330. And that doesn't include any passive income you would receive in the meantime.
Overall, based on the above, I don't think it is overly surprising that BHP shares are popular with income investors.
