BHP Group Ltd's Dividend Analysis
Understanding BHP Group Ltd's Upcoming Dividend and Financial Health
BHP Group Ltd (NYSE:BHP) recently announced a dividend of $1.44 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into BHP Group Ltd's dividend performance and assess its sustainability.
What Does BHP Group Ltd Do?
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BHP is a global diversified miner mainly supplying iron ore and copper. The merger of BHP Limited and Billiton PLC created the present-day BHP Group. The dual listed structure from the 2001 BHP and Billiton merger was collapsed in 2022. Major assets include Pilbara iron ore and Escondida copper. Onshore U.S. oil and gas assets were sold in 2018 and the remaining Petroleum assets were spun off and merged with Woodside in 2022, with BHP vesting the Woodside shares it received to BHP shareholders. BHP is growing its nickel business to supply more battery grade nickel and is also entering the potash market through the development of its Jansen mine in Canada. It also purchased copper miner Oz Minerals in fiscal 2023.
A Glimpse at BHP Group Ltd's Dividend History
BHP Group Ltd has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BHP Group Ltd's Dividend Yield and Growth
As of today, BHP Group Ltd currently has a 12-month trailing dividend yield of 5.94% and a 12-month forward dividend yield of 5.29%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, BHP Group Ltd's annual dividend growth rate was 24.80%. Extended to a five-year horizon, this rate increased to 28.80% per year. And over the past decade, BHP Group Ltd's annual dividends per share growth rate stands at an impressive 14.10%.
Based on BHP Group Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of BHP Group Ltd stock as of today is approximately 21.06%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, BHP Group Ltd's dividend payout ratio is 1.20, which may suggest that the company's dividend may not be sustainable.
BHP Group Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BHP Group Ltd's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. BHP Group Ltd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and BHP Group Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BHP Group Ltd's revenue has increased by approximately 12.40% per year on average, a rate that outperforms approximately 53.85% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, BHP Group Ltd's earnings increased by approximately 19.10% per year on average, a rate that outperforms approximately 60.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.10%, which outperforms approximately 65.61% of global competitors, reinforces the expectation of continued financial health and dividend sustainability.
Conclusion: Evaluating BHP Group Ltd's Dividend Profile
BHP Group Ltd's dividend payments, growth rate, and payout ratio, combined with its profitability and growth metrics, present a comprehensive picture for value investors. While the dividend payout ratio raises questions about sustainability, the company's strong profitability and growth outlook may counterbalance these concerns. Investors should consider BHP Group Ltd's historical performance, current financial health, and future prospects when evaluating the stock for dividend income. With the tools and data provided by GuruFocus, discerning investors can make informed decisions about BHP Group Ltd and other high-dividend yield opportunities.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
