BHP Group Ltd (ASX: BHP) shares are a popular option for passive income.
That's because the mining giant is one of the most generous dividend payers in the world.
Every year, it shares a large portion of its profits with its lucky shareholders.
And while the size of these dividends will change depending on commodity prices, you can usually count on BHP shares to provide an attractive dividend yield.
So, with the BHP share price hitting a 52-week low this month, let's see what sort of passive income could be on the cards for buyers at these levels.
BHP dividends
As we covered here, the consensus estimate is for a fully franked dividend of US$1.46 in FY 2024. This equates to A$2.17 per share in local currency and represents a 5.3% dividend yield based on where BHP shares currently trade.
However, it is worth remembering that this full year dividend includes the 72 US cents per share interim dividend that BHP paid earlier this year.
This means that a final dividend of 74 US cents per share (110.4 Australian cents per share) is expected by the market next week.
After which, analysts at Goldman Sachs expect a fully franked US$1.23 per share (A$1.835 per share) dividend in FY 2025 and then a US$1.21 per share (A$1.805 per share) dividend in FY 2026.
Passive income
Based on the above, let's look at what sort of passive income you could generate from BHP's shares with different sized investments.
And to simplify things, I'm going to bundle BHP's final dividend for FY 2024 in with its FY 2025 dividends as they will all be paid within the next ~13 months.
If you were to invest $10,000 into BHP shares you would receive the following passive income:
- Next 13 months: US$481 or A$717
- FY 2026: US$295 or A$440
A $25,000 investment would yield the following:
- Next 13 months: US$1,200 or A$1,790
- FY 2026: US$739 or A$1,100
Finally, a $2,000 investment would produce the following passive income:
- Next 13 months: US$97 or A$145
- FY 2026: US$59 or A$88
Should you invest?
Goldman Sachs thinks investors could get great returns if they buy BHP shares at current levels.
The broker has a buy rating and $48.40 price target on them. This implies potential upside of almost 18% for investors over the next 12 months.
Combined with its passive income, this would mean a 12-month total return comfortably beyond 20%.
