BHP Group Ltd (ASX: BHP) shares are a popular option for investors hunting for a reliable passive income.
The Australian mining giant isn't a classic defensive stock or a major bank, but it does have a strong operational history and a reputation for paying a consistent dividend payout to investors.
At the time of writing, BHP shares are around 32% higher for the year-to-date and roughly 57% higher than 12 months ago.
But it looks like many analysts think the shares are now trading around fair value after the latest rally. TradingView data shows that 13 out of 18 analysts rate the mining giant's shares as a hold, another four rate the stock as a strong buy and one rates BHP shares as a strong sell.
The average $59.57 implies a small 1% downside at the time of writing. However, some expect the shares to fall 33% to $40.10, while others think BHP shares have the potential to climb 16% higher to $69.79.
As far as analyst data goes, BHP shares aren't a compelling buy for investors chasing a quick return. But the mining stock is still a strong passive income play.
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Why are BHP shares a good buy for passive income?
BHP is a premier blue-chip ASX 200 stock with a market capitalisation of around $306 billion and a strong operational history. At the time of writing, BHP is the largest company trading on the Australia share market.
BHP is a cyclical stock, primarily exposed to iron ore, copper, and other key commodities.
Unlike classic defensive stocks, cyclical stocks are closely tied to the broad economic cycle and commodity fluctuations.
This means BHP is at risk from value fluctuations and can experience a share price fall or spike in times when the market booms and contracts.
But the benefit of cyclical stocks is that they usually outperform during periods of economic recovery.
The large-scale but low-cost miner has a long history of regular dividend payments, dating back to around 2006. And its commodity exposure is diversified, too. This means it is able to maintain its dividend payouts even when commodity prices fluctuate.
What does the miner pay its shareholders?
BHP pays two fully franked dividends to shareholders per year. One in March and another in September.
The miner's most recent $1.0385 per share fully franked interim dividend was paid to shareholders in March. This translates to a dividend yield of around 3.5% at the time of writing.
Analysts forecast BHP to pay an annual dividend of $1.91 per share in FY26, and a slightly lower $1.80 per share in FY27. That translates to a forward dividend yield of around 3.2% and 3% respectively, at the time of writing.
