If I invest $10,000 in BHP shares how much passive income will I receive?

Will BHP line your pockets with big dividends in the near term?

| More on:
A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to generating passive income from ASX shares, there a few options more popular than BHP Group Ltd (ASX: BHP) shares.

Every year, the Big Australian rewards its shareholders by paying them big dividends.

And while the amount that is returned will vary depending on commodity prices in a particular year, when times are good, this can amount to tens of billions of dollars being returned to shareholders in total.

The good news for passive income seekers is that times are relatively good right now. Sure, commodity prices aren't as strong as they were a couple of years ago, but they are high enough to underpin some generous payouts from the mining giant. But just how generous?

How much passive income will BHP shares generate?

For our example, we're going to imagine that we have $10,000 waiting in the wings, ready to be invested in BHP shares.

Based on its current share price of $44.05, if you were to invest that amount, you will end up owning 227 shares.

Now onto the passive income. A recent note out of Goldman Sachs reveals that its analysts are forecasting fully franked dividends per share of US$2.05 in FY 2023 and then US$1.63 in FY 2024.

This currently equates to A$3.04 per share and A$2.42 per share at current exchange rates, which represents dividend yields of 6.9% and 5.5%, respectively.

Based on the above, your $10,000 investment would yield passive income of approximately $690 in FY 2023 and $550 in FY 2024. Though, it is worth noting that BHP has already paid its interim dividend this year.

But the returns may not stop there. Goldman Sachs has a buy rating and $49.90 price target on BHP's shares.

If its shares were to reach that level, your $10,000 investment would be valued at approximately $11,330. And that doesn't include any passive income you would receive in the meantime.

Overall, based on the above, I don't think it is overly surprising that BHP shares are popular with income investors.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

Analysts name the best ASX dividend stocks to buy this month

Let's see what they are saying about these income options.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 5% to 7% yields

Brokers think these shares could be top picks for passive income investors.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Own ASX A200, NDQ, or ARMR ETFs? It's dividend payday for you!

Betashares will pay distributions to ASX ETF investors today.

Read more »

A young female ASX investor sits at her desk with her fists raised in excitement as she reads about rising ASX share prices on her laptop.
Dividend Investing

Why it's a great day for Vanguard ASX ETF investors!

It's dividend payday for investors in the VAS, VHY, VGS and other Vanguard ETFs today.

Read more »

Male hands holding Australian dollar banknotes, symbolising dividends.
Dividend Investing

This ASX 200 stock has suddenly become the highest-yielder on the index!

This stock currently has a yield of over 10%.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Dividend Investing

2 of the best ASX dividend shares to buy for income

Let's see what analysts at Bell Potter are saying about these top income stocks.

Read more »

a woman looks at her phone while making a transaction at the counter of a store where racks of clothing can be seen in the background.
Dividend Investing

Is this hidden gem ASX share a buy for passive income with a 7% yield?

I think this small company offers big potential as a dividend stock.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

The ultimate passive income portfolio using ASX dividend stocks

Here are five stocks that analysts think could be buys for income investors.

Read more »