Owners of BHP Group Ltd (ASX: BHP) shares have been receiving attractive dividends for many years now. But how is the BHP dividend shaping up for 2024?
BHP is one of the world's biggest resource companies, and it also generates some of the most impressive profits. This generally enables the miner to dish out some hefty dividend payments to shareholders.
FY22 was a record year, with a US$3.25 dividend per share for BHP investors. However, FY23 saw a reduction of the full-year dividend per share to US$1.70, though this was still the third-largest annual ordinary dividend in the company's history, according to BHP.
Let's take a look at what sort of income shareholders can expect in FY24.
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BHP dividend predictions
The ASX mining share has a minimum dividend payout ratio of 50%.
Commsec estimates suggest BHP could generate earnings per share (EPS) of $3.93 in FY24. If the mining company were to pay an annual dividend per share equivalent to 50% of net profit, this would result in a dividend payout of $1.96. This would mean a fully-franked dividend yield of 4.5%, or a grossed-up dividend yield of 6.4%.
If an investor had $1,000 worth of BHP shares, that would mean an annual cash dividend of $45, and including franking credits, we're talking about $64 of total income.
However, the 50% payout is the minimum set out by the company, and BHP could decide to pay out more than this.
The current projection on Commsec is that BHP could pay an annual dividend per share of $2.25 in FY24, which would represent a dividend payout ratio of around 57%.
At the current BHP share price, the annual $2.25 dividend per share represents a cash yield of around 5.1% and a grossed-up dividend yield of 7.3%. With a $1,000 investment, this would be $51 of cash dividends and $73 when we include franking credits.
Is this a good time to invest in the ASX 200 mining stock?
According to analyst ratings collated by Factset, there are nine buy ratings, 13 hold ratings and three sell ratings.
With the iron ore price currently sitting at around US$120 per tonne, BHP is able to deliver solid profit and cash flow, enabling decent dividends.
However, when it comes to resource companies, I'd prefer to invest when the market is more pessimistic about the iron ore price and, therefore, BHP's shorter-term outlook. If I were trying to outperform the market, I'd wait for a cheaper entry price before buying in.
