Invest $10,000 in BHP shares and get $480 in passive income

Here's what sort of passive income Goldman Sachs expects from the Big Australian.

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BHP Group Ltd (ASX: BHP) shares are one of the most popular options for Australian passive income investors.

In fact, according to its most recent annual report, the mining giant's shares are held by over 600,000 individuals and countless superannuation funds.

This means that when the Big Australian pays a dividend, a good portion of the country gets a little bit richer.

And they certainly have got richer collectively in recent years. In FY 2023, the BHP board declared dividends totalling US$8.6 billion to shareholders for the year, taking the total amount in cash dividends for the past three years to over US$40 billion.

It has since returned a further US$3.6 billion to shareholders through the payment of its interim dividend in March.

But those dividends have been and gone. Let's now see what sort of passive income could be generated from the mining giant's shares over the next 12 months.

Passive income from BHP shares

Let's imagine that you are lucky enough to have $10,000 burning a hole in your pocket that you can put to work in the share market.

On Monday, BHP shares ended the day at $42.97. This means that if you were to invest $10,000 (and an extra $12.01) into the Big Australian, you would join its ultra-long list of shareholders with 233 units.

According to a recent note out of Goldman Sachs, its analysts are forecasting fully franked dividends of US$1.45 per share in FY 2024 and then US$1.26 per share in FY 2025. Based on current exchange rates, this means dividends of $2.21 per share and $1.92 per share, respectively.

As I mentioned above, BHP has already paid its interim dividend for FY 2024. So, in respect to passive income over the next 12 months, that will come from its final dividend for FY 2024 and then its interim dividend for FY 2025.

Based on Goldman's estimates, this is likely to mean dividends of approximately $2.07 per share are paid out to shareholders between now and this time next year.

So, if you were to invest $10,000 into BHP shares and end up with 233 units, you would receive total passive income of $482.31.

But the returns won't necessarily stop there. The broker also sees scope for BHP shares to rise meaningfully from current levels.

Goldman Sachs currently has a buy rating and a $49.00 price target on its shares. This values those 233 units at $11,417, which is approximately $1,400 greater than the price you would pay to buy them.

Combined with the passive income, that's a total return of approximately $1,900.

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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