How to generate $10,000 of passive income from BHP shares

Is the Big Australian a good option for income investors?

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Miner holding cash which represents dividends.

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With the iron ore price booming at the moment, Australia's largest miners are swimming in cash.

This bodes well for owners of BHP Group Ltd (ASX: BHP) shares, which could receive some big dividends in 2024.

But how many shares would you need to own if you wanted to receive $10,000 in passive income from the Big Australian this year? Let's find out.

Passive income from BHP shares

According to a note out of Goldman Sachs, its analysts are expecting BHP to reward its shareholders with a fully franked US$1.49 per share dividend in FY 2024.

Based on current exchange rates, this would mean a dividend of $2.26 per share in local currency. It also equates to a 4.75% dividend yield.

Based on this forecast, investors would need to own approximately 4,425 BHP shares in order to generate $10,000 of passive income this year.

Unfortunately, this would mean a rather significant investment. At the current share price, investors would need to put $210,364.50 into BHP shares to receive the desired amount of income.

But Goldman thinks it could be worth it. It has a buy rating and $49.40 price target on the miner's shares. This means that your 4,425 units could have a market value of $218,595 before dividends.

Furthermore, while Goldman is forecasting a dividend cut in FY 2025, a decent payout is still expected.

It has pencilled in a fully franked dividend of US$1.18 per share (A$1.79 per share). If this proves accurate, your 4,425 BHP shares would yield a further $7,920.75 in dividends over the 12 months.

That's a total of almost $18,000 of passive income over the next two financial years.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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