The BHP Group Ltd (ASX: BHP) dividend has rewarded investors for many years, but can the mining giant maintain and increase its payouts over the next few?
BHP is one of the world's largest diversified miners and Australia's biggest ASX-listed company, with a market capitalisation of $224.5 billion. A significant dividend payer in Australia, not necessarily in dividend yield terms, BHP returns billions of dollars to shareholders in dividends each year.
The miner has decided on a minimum 50% dividend payout ratio, which means it typically pays a fairly generous amount.
But, it's not a business that can rely on growing profit year after year. Let's have a look at how big the dividend payouts could be in the next few years.
Image source: Getty Images
BHP dividend forecast for 2024
BHP recently reported its FY24 first-half result, which included a dividend payout ratio of 56%. Its dividend was US 72 cents per share. This represented a double-digit cut in percentage terms, though it still meant a payout of US$3.6 billion.
The reduced payout came after profit from operations was down 56% to US$4.8 billion, with weakness in nickel and Samarco.
But this is just half of what the 2024 annual payout will be, with the final dividend payout for FY24 landing in September.
The forecast on Commsec suggests the business could pay an annual dividend per share of A$2.40, which would be a grossed-up dividend yield of 7.7%.
Forecast for 2025
The further into the future forecasts go, the broader the range of potential outcomes, particularly with mining shares affected by the changing price of commodities. The iron ore price, for example, could be stronger or much weaker than it is right now.
On Commsec, the prediction is that BHP's profit and dividend could be a bit lower than FY24. The miner is forecast to pay an annual dividend per share of A$2.21 in FY25. This would be a grossed-up dividend yield of 7.1%.
And for 2026?
The Commsec projection expects BHP profit and dividends to decrease again by a small amount in FY26.
The company is forecast to pay an annual dividend per share of A$2.15 in the 2026 financial year. This would be a grossed-up dividend yield of 6.9%.
Foolish takeaway
BHP is expected to keep paying a solid dividend for the foreseeable future, but forecasts can change as quickly as commodity prices, so we'll have to see how much the future aligns with those predictions.
