Is the BHP share price a buy for its 5% dividend yield?

The BHP Group Ltd (ASX: BHP) share price has dropped more than 10% since mid-June, as the chart below shows, which has boosted the dividend yield.

BHP has been an excellent dividend pick over the last decade, with the ASX mining share benefiting from various times of higher iron ore prices. Even an iron ore price of US$100 per tonne can allow it to make good earnings.

The company’s main commodities are iron ore and copper, though it also produces coal and is building a potash project in Canada called Jansen.

Following the company’s recent valuation decline, I think it’s worthwhile to consider the ASX mining share.

Dividend projection

According to the forecast on Commsec, the business could deliver a relatively pleasing dividend payout for shareholders.

The business is projected to pay an annual dividend per share of A$2.148 in the 2026 financial year. At the time of writing, this translates into a forward grossed-up dividend yield of 5.4%, including franking credits.

That’s not the biggest dividend yield on the ASX and the BHP dividend yield has been higher in recent years. That’s partly because the BHP share price has gone up so much in recent times, it’s (still) up 25% this year and up 47% in the past 12 months.

The higher the share price goes, the lower the dividend yield, assuming the dividend payment stays the same.

Is the BHP share price a buy?

There’s much more to the appeal of a business than just the passive income on offer.

The valuation also needs to make sense; otherwise, capital losses could offset the passive dividend income.

The latest update from the ASX mining share was its operating update for the period ending 30 June 2026.

Its most important commodities are iron ore and copper, so I’ll focus on those.

In the three months to June 2026, copper production was 491.9k, up 3% quarter-over-quarter but down 5% year-over-year. Iron ore production was 68.1mt, up 8% quarter-over-quarter, but down 3% year-over-year.

What was perhaps even more interesting was the guidance it gave. BHP produced 1.95mt of copper in FY26, but only expects between 1.65mt to 1.8mt of copper in FY28 – a sizeable decline. FY27 iron ore production is expected to be between 260mt to 272mt, down from 264.7mt in FY26.

Lower copper production is not ideal, given its plans to ramp up production in the coming years to take advantage of strong demand.

Even so, both the copper price and iron ore price are at strong enough levels that the business can generate strong profits. However, at the current elevated BHP share price, I’m not sure it’s an attractive buy.

Broker analysts seem to have a similar view. According to CMC Invest, of 14 recent ratings on the ASX mining share, two were buys and 12 were holds. The average price target is $59.08, suggesting only a slight rise (at the time of writing) over the next 12 months.

There are quite a few other ASX shares I’d rather buy for dividends.

The post Is the BHP share price a buy for its 5% dividend yield? appeared first on The Motley Fool Australia.

More reading

• BHP shares soared 62% in FY26. Can they keep climbing?
• Why I think BHP is the best ASX mining share
• How to build an ASX dividend portfolio that keeps paying you for decades
• What is Morgan’s updated view on Rio Tinto and BHP shares?
• 5 things to watch on the ASX 200 on Monday

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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.