If you're an income investor, then you will no doubt have considered the BHP Group Ltd (ASX: BHP) dividend at some point.
After all, the mining behemoth is one of the world's biggest dividend payers. Each year, it returns billions of dollars of its profits back to its shareholders, lining their pockets with cash and boosting their passive income.
However, it is fair to say that some investors have an aversion to investing in the mining sector. This is due to finding it difficult to predict mining cycles and the unpredictability of earnings.
While this is understandable if you're wanting a consistent and predictable level of passive income each year, you could still be doing yourself a disservice by missing out on some big dividend yields that are being offered by BHP shares.
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BHP dividend forecast
For example, Goldman Sachs is predicting that the BHP dividend will be large enough to provide above-average yields this year and next.
According to a recent note, its analysts expect the Big Australian to be in a position to pay 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$3.08 per share and A$2.45 per share at current exchange rates.
Based on the current BHP share price of $44.08, this will mean yield of 7% and 5.6%, respectively, for income investors. Both yields are well ahead of the traditional market average dividend yield of 4%.
In addition to the generous BHP dividend yield, Goldman also sees scope for sizeable capital returns.
The broker's buy rating and $49.90 price target implies potential upside of 13.2% for investors over the next 12 months. This stretches the total potential return to approximately 20%.
