Owning BHP Group Ltd (ASX: BHP) shares usually means receiving a sizeable amount of passive income in the form of dividends each year. The 2027 financial year could be an interesting one for the ASX mining share.
BHP has stepped up its copper exposure through acquisitions in recent years, which is helping now, while iron ore earnings look a little uncertain as the iron ore price goes through weakness.
On 20 October 2026, BHP announced its FY27 first-quarter update for the three months to 30 September 2026.
In that quarterly update, the company said that the average realised (sold) price for copper increased 53% year over year to US$7.01 per pound. However, the average realised price for its iron ore fell 9% year over year to US$76.27 per wet metric tonne (wmt).
With such a large increase in the copper price, that could be enough to offset the weakness in iron ore. So let's take a look at what that could mean for the dividend income for shareholders.
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Passive income projection
According to the forecast on CMC Invest, owners of BHP shares are expected to see a dividend reduction in FY27 amid a likely decline in iron ore earnings.
The ASX mining share's board of directors is forecast to cut the FY27 dividend to $2.149 per share for Australians.
If the BHP dividend is $2.149 per share, the dividend yield would be 3.9% excluding franking credits and 5.5% including franking credits. I believe it's the copper division that will play an important part in funding that dividend amid the pain for iron ore.
This shows the power of the BHP diversification strategy across commodities, rather than relying on just iron ore.
What would happen with a $20,000 investment in BHP shares?
At the time of writing, the BHP share price is $55.56. With a $20,000 investment, an Australian investor could buy 359 BHP shares (with a bit of change left over).
If the projection on CMC Invest becomes reality, an investor could receive approximately $771.49 in dividend cash and around $1,102.13 in grossed-up dividend income (including franking credits) for FY27.
Is this a good time to invest in BHP shares?
At the time of writing, the BHP share price has risen 30% over the last 12 months, so it's certainly not as cheap as it was. If I were trying to beat the market, I'd want to wait for a cheaper entry point.
Thanks to its exposure to copper, I think BHP is a solid business to own for the long term because there's a clear path to rising copper earnings amid ongoing adoption of electric vehicles, other forms of electrification, renewable energy, home and industrial battery installations, and so on.
According to CMC Invest, there have been 16 analyst ratings on the business, with 3 buy and 13 hold.
Of those 16 ratings, the average price target is $61.05, implying a possible rise of around 10% over the next year, at the time of writing. That could be a solid return, but I don't think there's a big enough margin of safety. If it were up to me, I'd invest in other ASX shares first.
