Today is a good day to own BHP Group Ltd (ASX: BHP) shares for two reasons.
One is that the mining giant's shares are pushing higher this morning.
In early trade, the Big Australian's shares are 1.5% higher to $45.74.
This means that the BHP share price is now up 13% over the past two weeks.
Why else is it a good day?
The other reason that it is a good day to own BHP shares is that it is payday for eligible shareholders.
As a reminder, in August BHP released its full-year results and reported a 3% year on year increase in revenue to US$55.7 billion and a 2% lift in underlying profit to US$13.7 billion.
This allowed the BHP board to declare a fully franked final dividend of 74 US cents (A$1.11) per share, which represents a return of US$3.8 billion (A$5.5 billion) to shareholders.
To put that into context, this payout is more than the market capitalisation of Lendlease Group (ASX: LLC). And that's just its final dividend.
Well, today is payday, with BHP's dividend hitting bank accounts in the coming hours.
What's next for the BHP dividend?
According to a recent note out of Goldman Sachs, it believes that BHP's dividend is heading lower in the coming years.
It is forecasting the following:
- FY 2025 – 116 US cents (168 Australian cents) per share
- FY 2026 – 113 US cents (164 Australian cents) per share
- FY 2027 – 106 US cents (154 Australian cents) per share
- FY 2028 – 99 US cents (144 Australian cents) per share
- FY 2029 – 108 US cents (157 Australian cents) per share
Should you buy BHP shares?
Despite its falling dividends, Goldman Sachs thinks investors should be buying the mining giant's shares right now. It has a buy rating and $48.80 price target on them.
Commenting on its bullish stance, the broker said:
BHP is currently trading at ~5.5x NTM EBITDA (25-yr average EV/EBITDA of 6.6x), a premium to RIO on ~4.5x; and at 0.85xNAV vs RIO at 0.75x NAV. Over the last 10 years, BHP has traded at a ~0.5x premium to global mining peers. We believe this premium can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore where BHP maintains superior FCF/t vs. peers).
We continue to believe that BHP's major opportunity is growing copper production in Chile at Escondida and Spence, and growing production and capturing synergies in South Australia between Olympic Dam and the previous OZL assets.
