Why BHP shares are poised to continue delivering strong dividends in 2023: expert

BHP Group Ltd (ASX: BHP) shares have become increasingly popular among investors seeking passive income from their ASX stocks.

At this morning’s opening price of $49.91, BHP shares pay a noteworthy 9.3% fully franked trailing dividend yield.

The S&P/ASX 200 Index (ASX: XJO) mining giant made headlines this time last year with a record interim dividend payout of $2.08 per share. That was paid on 28 March.

Adding in the September final dividend of $2.55 per share, we arrive at that 9.3%, inflation-beating, yield.

Of course, we are talking about trailing yields here.

The question for ASX 200 income investors now is, can the good times continue?

For some insight into the outlook for dividends from BHP shares in 2023, we turn to managing director at Plato Investment Management Don Hamson.

What to expect in 2023?

The Motley Fool published our interview with Hamson on the broader outlook for ASX 200 dividend shares last week.

Overall, he was quite positive on what to expect from the ASX mining stocks.

“Despite the naysayers, Australian miners have continued to deliver strong dividends, hence why many have remained in our portfolio,” he told us.

“Broadly speaking, we think this will continue into 2023. Income from the sector will remain strong, but we may not see the record dividends and special dividends seen in recent years.”

Hamson said that BHP shares were a “a good example here”.

According to Hamson:

In FY22, it posted net profits of US$22.4 billion. That was up 64% on 2021 when many thought it was the peak for the ‘Big Australian’ because it was the top of the iron ore cycle. But last year, it was coal that provided a windfall, generating about US$9.5 billion for the company. A great demonstration of diversified revenues.

Hamson noted that when franking credits are accounted for, BHP shares offer a double-digit yield.

“BHP is now trading on a double-digit grossed-up yield, with an incredibly strong balance sheet,” he said. “In its FY22 financials, it had US$300 million worth of debt – it can make that up in about a week.”

How have BHP shares been performing?

As you can see on the chart below, BHP shares are up 6% so far in 2023. Over the past 12 months, the ASX 200 miner is up 1%. But remember, those figures don’t include the juicy dividend payouts.

The post Why BHP shares are poised to continue delivering strong dividends in 2023: expert appeared first on The Motley Fool Australia.

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More reading

• BHP share price jumps as Oz Minerals acquisition clears major hurdle
• Why are ASX 200 iron ore shares being hammered hard on Friday?
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• Why are ASX 200 iron ore shares like Rio Tinto sliding lower today?
• Two ‘top prospect’ ASX 200 dividend shares for 2023 revealed: fund manager

Motley Fool contributor Bernd Struben 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.

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