The BHP Group Ltd (ASX: BHP) share price is having a positive finish to the week.
In early afternoon trade, the mining giant's shares are up over 1% to $49.89.
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Why is the BHP share price rising?
Today's rise by the BHP share price appears to have been driven by the release of a broker note out of Morgans this morning.
According to the note, the broker has upgraded the Big Australian's shares to an add rating with a $51.80 price target.
Based on the current BHP share price, this suggests potential upside of almost 4% for investors. And while this isn't overly exciting upside potential, let's not forget that BHP is a big dividend payer.
Morgans is forecasting fully franked dividends per share of $3.68 in FY 2022 and $2.68 in FY 2023. This equates to yields of 7.4% and 5.4%, respectively, over the next two financial years.
What did the broker say?
The broker made the move after upgrading its iron ore price forecasts to factor in an expected steepening cost curve and higher sustaining steel demand.
Morgans expects BHP to benefit more than its rivals Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO). As a result, it has only got hold ratings on the latter two. Its analysts explained:
"While all trading in a narrow range in terms of discount to valuation, BHP remains our standout top preference amongst the iron ore miners. BHP offers superior diversification, operational performances, ability to defend against cost and labour pressures, and a solid yield profile."
We also see potential catalysts around: Completing petroleum divestment, Potential coal divestments, Capital management, and New growth additions.
We remain neutral on Rio Tinto and Fortescue Metals Group, both on Hold. For RIO we see strong earnings offset by ongoing operational issues across its business continuing to bite. While for FMG we also see bumper FCF continuing but believe consensus is materially underestimating FMG's capex profile for the next decade."
