BHP Group Ltd (ASX: BHP) shares not only offer the potential for capital gains, but the S&P/ASX 200 Index (ASX: XJO) iron ore miner is also well known for its reliable, fully franked dividend payouts.
With the iron ore price racing above US$215 per tonne in mid-2021, so too did the passive income the miner paid its shareholders.
The final 2021 dividend of $2.715 per share set a new all-time high that still stands today.
And BHP shares paid a record interim dividend of $2.081 in 2022, topping it off with a final dividend of $2.552 a share. That one was second only to 2021's final payout.
During the first half of 2022, the iron ore price broadly traded in the US$130 to US$150 per tonne range.
You likely recall that the industrial metal then plunged to lows of around US$85 per tonne by the end of October 2022 amid slumping demand from China.
As for 2023, the iron ore price hit lows of just under US$100 per tonne in late May, before momentum turned once more and prices began to rise.
As you'd expect, with iron ore the biggest revenue earner for BHP shares, the 2023 dividends also dropped significantly.
BHP paid an interim dividend of $1.364 per share on 30 March and a final dividend of $1.251 on September.
That still sees the ASX 200 mining stock trading at a fully franked yield of 5.6%.
But that yield could see a big boost in 2024.
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What's the passive income outlook for BHP shares in 2024?
Turning to 2024, as of Tuesday afternoon, iron ore was trading for US$136 per tonne.
According to Andrew Fraser, co-portfolio manager Merlon Capital, that's good news for BHP shareholders looking forward to some welcome passive income.
"The iron ore pricing environment is [a] much more significant contributor to the cash flows, than some of the other commodities like nickel or copper," Fraser said (quoted by The Australian Financial Review).
"BHP and Fortescue have reasonably strong grounds to maintain their dividends, especially since the iron ore price has risen in the past six months," he added.
While Fraser is talking about the ASX 200 miners maintaining their dividends, there are reasons to believe the 2024 payouts could be significantly higher.
Namely, if the iron ore price continues to march higher from here to levels not seen since the first half of 2022.
And that's precisely what the analysts at Citi are forecasting.
Based on increasing stimulus measures from the Chinese government and People's Bank of China (PBoC) to spur the nation's sluggish economy and steel-hungry property markets, Citi forecasts the iron ore price will surge back to US$150 per tonne during the first three months of 2024.
Commenting on China's increasing stimulus measures, Citi analyst Wenyu Yao said:
We see these measures as positive and can see this risk rally continuing over the coming month on the back of further details regarding urban village redevelopment and anticipated strong total social financing figures.
And BHP shares, along with the ASX 200 miner's dividends, could see tailwinds continuing into the second quarter.
"As policy momentum could gather speed ahead of the National People's Congress in March, we see rising upside catalysts into the second quarter," Yao added.
