BHP shares lose top dividend-payer title, what happened?

BHP Group Ltd (ASX: BHP) shares are responsible for being one of the biggest dividend payers in the world.

That doesn’t necessarily mean that BHP has the biggest dividend yield or the most amount of cash per share. However, when you look at the total dividend payment that leaves BHP’s bank account each result, it’s a huge amount of cash flow that’s sent out.

A year ago, in the third quarter of 2021, BHP had the astonishing title of being the world’s biggest dividend payer, according to the Janus Henderson Group (ASX: JHG) Global Dividend Index.

What happened to the BHP dividend title?

Firstly, while BHP has lost its dividend title, shareholders shouldn’t feel too bad.

It lost the dividend crown, but in the third quarter of 2022 it was still the second biggest dividend payer in the world.

Plus, it lost the title to China Construction Bank. It may not be the world’s most recognisable business. But it was the world’s biggest dividend payer in the third quarter of 2016, 2018, 2019 and 2020. The Chinese bank has simply regained its leading position.

Bloomberg describes the bank’s activities:

The company offers deposits, loans, fund management, foreign exchange, and other services. China Construction Bank provides its services to individuals, enterprises, and other clients.

China has a huge economy, so perhaps it’s not surprising that a bank is one of the biggest businesses there.

FY22 recap

BHP’s latest dividend was the final dividend of FY22. This amounted to US$1.75 per share, or US$8.9 billion. It was a lower payment than the final dividend of FY21 of US$2 per share, which equated to US$10.1 billion.

While the final dividend was down, the total dividend for FY22 was up 8% to US$3.25 per share. This came after a 26% increase in continuing operations underlying attributable profit to US$21.3 billion and a 13% rise in continuing operations net operating cash flow to US$29.3 billion.

What could happen next?

The BHP share price and dividend are usually closely linked to the profit that the business generates, which in turn comes from commodity prices. There are expert thoughts that the iron ore price could rise back to US$150 per tonne. This would be great for profitability.

It has been a volatile year for the business. The iron ore price has been rising in recent weeks as a Chinese COVID reopening appears to be getting closer.

According to CommSec, BHP could generate $4.29 of earnings per share (EPS) and pay an AU$3.08 dividend per share. This translates into the BHP share price being priced at 11x FY23’s estimated earnings with a projected grossed-up dividend yield of 9.4%.

The post BHP shares lose top dividend-payer title, what happened? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Where will BHP shares be in 5 years?
• Is the SPDR S&P/ASX 200 Fund (STW) an ETF?
• 5 things to watch on the ASX 200 on Wednesday
• What’s the outlook for the iron ore price in 2023?
• Up 20% in a month, can the BHP share price continue it’s run in December?

Motley Fool contributor Tristan Harrison 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.

from The Motley Fool Australia https://ift.tt/nUCQZpi