Owning BHP Group Ltd (ASX: BHP) shares could be a rewarding choice for dividends in the coming years.
The ASX mining share's relatively small exposure to coal (energy and steelmaking) may not be a big growth industry, but its copper division seems to have a very compelling future given the demand outlook.
In multiple ways, I view BHP Group Ltd (ASX: BHP) shares and Rio Tinto Ltd (ASX: RIO) shares as more compelling than Commonwealth Bank of Australia (ASX: CBA) shares.
The long-term outlook for BHP seems positive and the business has shown a willingness to expand into other commodities, such as potash (a fertiliser). The world always needs commodities and BHP can diversify in the future if it sees opportunities.
Let's take a look at what analysts are projecting with the BHP dividend in the next few years.
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FY27
We've only seen the first quarter of the 2027 financial year, being the three months to 30 September 2026, but there are already some numbers to consider.
It said that copper production of 400.7kt was down 19% year-over-year because of lower planned concentrator feed grades and operational disruptions across assets, including planned maintenance and severe weather in Chile.
But, the company did say that it's advancing its strategy to grow Copper SA's copper production to around 500kt per year by 2035 and up to 650kt by 2040.
Iron ore production grew by 4% year-over-year to 66.5mt despite significant planned maintenance, which it said demonstrated the strength and resilience of its integrated supply chain.
In terms of what it sold its commodities for, the average realised price was US$7.01 per pound in the first quarter of FY27, up 53% year-over-year.
Its iron ore average realised price was US$76.27 per wet metric tonne, which represented a reduction of 9% year-over-year.
For FY27, the business has guided that it expects copper production to be between 1,650kt to 1,800kt and iron ore production is expected to be between 260kt to 272kt.
In terms of the dividend, the projection on Commsec currently suggests an annual payout of $2.088 per BHP share for FY27. That would be a dividend yield of 3.8% excluding franking credits and 5.4% including franking credits.
FY28
The following financial year's success could be dependent on what happens with commodity prices, but the company is optimistic about the longer-term commodity demand.
In August, the ASX mining share said about copper:
Copper fundamentals remain attractive. Demand is expected to grow from ~34 Mtpa today to >50 Mtpa by CY50, driven by traditional economic growth (home building, electrical equipment and household appliances), energy transition (renewables and electric vehicles) and digital (artificial intelligence and data centres). Current expectations are that copper demand associated with investment in data centres could grow around sixfold between 2024 and 2050, up to around 3 Mtpa. Operational and project development challenges will place upward pressure on industry costs, potentially resulting in a higher and steeper copper cost curve.
BHP also said the following about iron ore:
Looking ahead, we maintain our view that China's real steel production will plateau around the 1 Btpa level for the rest of the decade. In the medium-term, scrap will play an increasingly important role in steelmaking and result in a declining profile for Chinese pig iron production. In the long run, the seaborne iron ore trade is likely to undergo steady diversification as demand grows in emerging economies.
India, historically a major iron ore exporter, saw imports grow to 12 Mt in CY25 and this has continued into CY26 with imports rising further. This trend reinforces the view that India is undergoing a structural shift towards net imports, as domestic iron ore supply lagging behind steel capacity growth – with some market expectations of imports above 80 Mt by 2030.
Overall, the outlook seems positive and the company is projected to increase its payout in FY28 to $2.121 per BHP share.
FY29
The commentary about demand suggests a positive end to the decade for the ASX mining share and there could be a notable increase in profitability and the dividend for shareholders.
According to the forecast on Commsec, the ASX mining share could hike its annual dividend per BHP share to $2.434. At the time of writing, that translates into a forward dividend yield of 4.4% excluding franking credits and 6.3% including franking credits.
It could be a rewarding choice for dividend income, but I wouldn't call the ASX mining share cheap. I like to invest when investors are pessimistic about the commodity outlook, but BHP's share price is still up about 30% over the past year.
