Own BHP shares? Here's your first-half results preview

Will BHP be paying a bumper dividend with its results next week?

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All eyes will be on BHP Group Ltd (ASX: BHP) shares next week when the mining giant reports its eagerly anticipated half-year results.

Ahead of the release on Tuesday 20 February, let's look at what the market is expecting from the Big Australian.

BHP half-year results preview

With iron ore prices trading at strong levels during the first half, expectations are high for BHP's half-year results.

According to a note out of Goldman Sachs, its analysts are expecting the company to report first-half revenue of US$27,595.57 million. This will be an increase of 6.2% over the US$25,982 million that was reported a year ago.

It is expected to be a similar story for earnings, with the consensus estimate at US$1.43 per share. This is up 10% on the prior corresponding period.

However, investors hoping for a dividend windfall may be left disappointed.

A number of brokers believe that the miner will be forced to reduce its payout ratio meaningfully to account of a sizeable jump in capital expenditure.

Commenting on the upcoming result, the team at Morgans recently said:

Moderating dividend. We expect a lower dividend payout ratio of 55% in the first half, which would be the lowest level of earnings paid out since 2018. We base this assumption on rising investment (capex +60% yoy) and net debt (US$12.5 – $13.0bn vs target range of US$5 – $15bn). While this would see a lower dividend, and on a stronger share price yoy, BHP still offers an enticing dividend yield profile.

If this proves accurate and BHP delivers on the consensus estimate for earnings, it will mean a dividend of 78.65 US cents per share. This would be down from 90 US cents a year earlier.

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