One of the most popular options on the Australian share market for income investors is BHP Group Ltd (ASX: BHP).
Countless investors across the country generate passive income from the mining giant's shares every six months.
And this certainly is no small change. In recent years, the Big Australian has rewarded its shareholders with tens of billions of dollars in dividends. This has lined the pockets and superannuation funds of millions of Australians.
But just how much would you need to invest to generate $5,000 of passive income from BHP's shares? Let's run the numbers.
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Passive income from BHP shares
To work out how many BHP shares you would need to own for our target passive income, we first need to see what analysts are forecasting the miner to pay out in the near term.
According to a recent note out of Morgans, its analysts are expecting BHP to pay fully franked dividends per share of approximately $1.47 in both FY 2025 and FY 2026.
Based on its current share price of $39.36, this equates to dividend yields of 3.7% for this year and next year.
So, with that in mind, let's see how many BHP shares it would take to pull in $5,000 of passive income.
$5,000 of income
Based on Morgans' forecast for a fully franked $1.47 per share dividend, investors would need to own 3,401 BHP shares.
Unfortunately, that's not going to come cheap. With its shares ending last week at $39.36, an investment of approximately $134,000 would be required.
But if you have the funds, it could be worth it.
Morgans currently has an accumulate rating and $43.70 price target on its shares.
This means that if the broker is on the money with its recommendation, those 3,401 BHP shares would be worth $148,623.70 by this time next year.
That's over $14,000 more than the original investment and doesn't include the $5,000 of passive income that is being forecast.
Overall, a total potential 12-month return of $19,000 could be on the cards for investors.
An alternative option
Unfortunately, very few people have $134,000 sitting idle to make an investment of this magnitude.
But that doesn't mean you can't do something similar in the future.
For example, if you could invest $1,000 a month into ASX shares and generate a 10% per annum return, it would take approximately 7.5 years to grow your portfolio to $134,000.
At that point, you can turn your focus to passive income and watch the money roll in every six months.
