Today is payday for shareholders of BHP Group Ltd (ASX: BHP), with the mining giant paying its latest dividend this morning.
However, this dividend isn't the type that shareholders would normally receive.
Image source: Getty Images
What is the BHP dividend?
Rather than paying shareholders cash, the latest BHP dividend is an in-specie dividend. An in-specie dividend is a dividend that is paid in assets.
On this occasion, the in-specie dividend sees BHP distribute a total of 914,768,948 new shares in Woodside Energy Group Ltd (ASX: WDS) to its shareholders. This follows the demerger of the Big Australian's petroleum assets into Woodside, creating a top 10 global energy producer.
Today, eligible BHP shareholders will receive one new Woodside share for every 5.534 BHP shares they own. This will be rounded down to the nearest whole share.
This means that if you own 100 BHP shares, for example, and are eligible to receive the in-specie dividend, you will be receiving 18 new Woodside shares. These will then be tradable tomorrow from the market open.
Should you hold onto your new Woodside shares?
BHP shareholders will no doubt be wondering whether their new Woodside shares are worth holding onto.
Analysts at Morgans certainly believe they are. This week the broker put an add rating and $32.90 price target on Woodside's shares. Based on the latest Woodside share price of $29.38, this implies potential upside of 12% for investors over the next 12 months.
Morgans said: "We view WDS as ideally positioned to generate high quality earnings, maintaining its leverage to the continuing upcycle in oil & gas, tackle its diversified growth profile to unlock more value upside and potentially deliver a shareholder return surprise at its next result."
