Owning BHP Group Ltd (ASX: BHP) shares normally comes with a pleasing level of dividend income. But the BHP dividend has been quite volatile in the last few years, so we're going to look at the possible income from the ASX mining share in the new financial year.
BHP produces a number of commodities, including iron ore, copper, and coal. Each of them plays a part in the company's role in generating profit for the business, which funds the company's dividend payouts.
The company's short-term profitability is heavily influenced by the price it can get for its commodities. According to the Australian Financial Review, the iron ore price recently hit a four-month high, which bodes well for BHP's profits in the foreseeable future if these gains hold, or even deliver further increases.
Let's unearth what analysts think could happen with the BHP dividend in the new financial year – FY26 – as well as FY25.
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Projections for the BHP dividend
The big Australian miner recently released its FY25 fourth-quarter production update. After seeing that, broker UBS gave its latest views on the potential near-term payouts.
UBS is currently predicting that the BHP dividend could be US 83 cents in the 2026 financial year. That translates into a forward grossed-up dividend yield of 4.4%, including franking credits.
The broker also projects that in FY25, the business could pay an annual dividend per share of 96 cents, keeping in mind it has already paid an interim dividend per share of US 50 cents. That would be an FY25 annual grossed-up dividend yield of 5.1%, including franking credits.
Therefore, UBS is predicting that the FY26 BHP dividend could be 13 cents per share smaller than the payout in FY25. The broker said that the dividend cash returns from the business are expected to be "lacklustre" and "long-dated". In other words, it could take a while for the company's growth investment initiatives (such as copper and potash) to be rewarded.
What is the broker seeing with the ASX mining share?
The broker recently cut its 2025 and 2026 demand and price forecasts for key commodities due to the expected impact of the trade war. There continues to be significant uncertainty about the full impact on global growth and how China will respond.
UBS sees potential risks in the near-term to the copper and iron ore prices if commodity prices weaken.
Second, with capital expenditure (namely copper and potash) expected to increase from $10 billion in FY25 to around $11 billion in FY26 and net debt in the upper half of the $5 billion to $15 billion target range, dividends will likely "be in focus".
UBS expects BHP to maintain a 50% dividend payout ratio policy with the FY25 result in August and provide more detail on how it can "flex" capital expenditure in the medium-term.
Finally, the broker said that potential acquisitions remain a risk and also a potential catalyst for the ASX mining share.
Overall, UBS has a neutral rating on the business with a target price of $40, implying little movement of the BHP share price over the next 12 months.
