There are a handful of S&P/ASX 200 Index (ASX: XJO) shares that are predicted to pay big dividends over the next couple of years.
Not every business that pays a dividend offers a large yield. It's influenced by a few different factors including the dividend payout ratio and the valuation of a business.
Companies with relatively low price/earnings ratios (p/e ratios) have the potential to pay particularly high dividend yields.
However, an ASX 200 dividend share isn't necessarily a buy just because of the yield. The investment case also has to make sense. The experts currently like these two businesses which are expected to make it rain dividends in the next few years:
BHP Group Ltd (ASX: BHP)
BHP is one of the largest resource businesses in the world.
It has a diversified portfolio of different commodities. After the planned divestment of its petroleum business to Woodside Petroleum Limited (ASX: WPL), the commodities that BHP will have exposure to will be iron ore, copper, nickel, potash and coal. However, the resources giant has said it's focused on future-facing commodities, so time will tell what happens with the coal division.
Iron ore is typically the biggest profit generator for the business. The iron ore price went through a large drop near the end of 2021, but it has since come storming back. CommSec pointed out today that the iron ore price rose another 0.4% to US$146.60 per tonne on Friday, due to "shrinking supply from Brazil and hopes for a boost in infrastructure spending in China."
BHP is currently rated as a buy by the broker Morgans, with a price target of $48.60. The broker reckons that the ASX 200 dividend share is going to pay a grossed-up yield of 10.2% in FY22 and 8% in FY23.
The company continues to work on extending its list of projects. The potash Jansen project in Canada is expected to have a multi-decade lifespan and be able to earn high margins.
Bank of Queensland Limited (ASX: BOQ)
BOQ is one of the largest challengers to the other big four ASX banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
There are now three main brands within the BOQ business: BOQ, ME Bank and Virgin Money Australia.
It's currently rated as a buy by the broker Morgan Stanley with a price target of $10. The broker thinks the bank is going pay a grossed-up dividend yield of 8.25% in FY22 and 9% in FY23.
In the first quarter of FY22, the ASX 200 dividend share reported strong application volumes across both the housing and business lending portfolios. Management said that growth was disciplined and high-quality with low levels of lending with a loan-to-value ratio of more than 90%.
BOQ said its net interest margin (NIM) was going to be slightly lower than previously guided because of tougher trading conditions, including yield curve volatility, intense price competition, increased fixed rate lending and higher liquid asset balances.
But, FY22 expenses are expected to be around 1% lower than FY21. The ME Bank integration program is on track, with approximately $23 million of full year synergies delivered in the first quarter of FY22 thanks to things like operating model changes and early supply chain benefits.
