BHP Group Ltd (ASX: BHP) shares are among the most popular out there for income investors.
This is for good reason. The Big Australian is one of the biggest dividend payers in the world, sharing tens of billions of dollars with its shareholders over the last few years.
But will this be the case in the future? Let's find out!
Where's the BHP dividend heading from here?
During the first half of the current financial year, the mining giant's interim dividend was cut by 40% to 90 US cents. This cut reflects lower commodity prices and inflationary pressures.
According to a note out of Goldman Sachs, its analysts are forecasting a fully franked US$1.15 per share final dividend in August. This will take BHP's full-year dividend to US$2.05 per share, which equates to A$3.12 per share at current exchange rates.
Based on the current BHP share price of $44.72, this represents an attractive 7% dividend yield for investors.
So far so good! But what about 2024?
Unfortunately, Goldman Sachs is expecting another dividend cut in FY 2024. Its analysts are forecasting a fully franked US$1.59 (A$2.36) per share dividend for that financial year. This will be approximately 24% lower than this year's forecast dividend.
However, it is well worth noting that this still equates to an above-average fully franked dividend yield of 5.3%. So, it certainly isn't anything to complain about if you ask me!
In addition, Goldman Sachs believes that BHP's shares are undervalued at the current level.
Its analysts currently have a buy rating and $49.00 price target on them, which implies potential upside of 9.6% over the next 12 months. This brings the total potential 12-month return to approximately 15%.
