Northern Star vs BHP: Which ASX share is better for passive income?

Northern Star Resources vs BHP shares: Income investor showdown

When Aussie investors hunt for steady income from ASX blue-chips, both Northern Star Resources Ltd (ASX: NST) and BHP Group Ltd (ASX: BHP) tend to land high on the shortlist. Both are resource heavyweights, but they operate in different leagues – one as a leading gold producer, the other a global mining titan with fingers in many commodities. For those looking to boost their income stream, is one a more compelling buy right now? Here’s how these shares stack up, side by side.

The case for Northern Star Resources

Northern Star Resources is a homegrown gold producer, operating major mining projects in Western Australia and Alaska. The company has grown through savvy acquisitions and still invests heavily in exploration. As a pure-play gold stock, Northern Star’s fortunes are closely tied to gold prices, making it a classic option for investors seeking precious metal exposure but with the scale and liquidity of an ASX top-20 company.

A couple of fundamentals stand out for income seekers:

• Dividend yield: 2.41%
• Franking: 100%, so qualified Australian investors can enjoy the full benefit of franking credits
• P/E ratio: 19.71, indicating a valuation that is a bit below BHP’s on this measure

Recent dividend history shows Northern Star lifting its annual payout to $0.55 per share, fully franked, as of the most recent year. According to its most recent public description, the group manages multiple established goldfields and has expanded via strategic deals.

The case for BHP Group

BHP Group is one of the biggest names on the ASX—and indeed, in global mining. With operations spanning iron ore, copper, coal, and other key commodities, BHP’s size brings fortress-like diversification and financial might. The company unified its listing structure in 2022, further streamlining its position as an Aussie share market leader.

Key factors for income-focused investors:

• Dividend yield: 3.90%, well above Northern Star’s current yield
• Dividend per share: $2.42 over the last year, with a long and consistent payout history
• Franking: 100%

BHP has a reputation for generous dividends, and the current figures back that up. Its market cap, at $310.24 billion, towers above most, cementing its role as a “core” holding for many income portfolios. As of its company profile, BHP’s global operations give it exposure to multiple commodity cycles, providing some ballast compared to more specialised miners.

Valuation comparison

Here are some head-to-head fundamentals:

BHP currently carries a higher P/E ratio than Northern Star. Since they operate across different resource sectors (diversified mining vs. pure gold), P/E ratios aren’t always directly comparable, but BHP does command a “blue-chip” premium. Notably, both offer fully franked dividends—a real plus for local income investors. The dividend yield, however, skews well in BHP’s favour.

Recent share price performance

Comparing recent share price action until 24 September 2026:

• Northern Star Resources: Closed at $22.27, down 2.3% on the day; YTD return is -12.6%
• BHP Group: Closed at $61.02, down 1.7% on the day; YTD return is a strong 41.8%

While Northern Star has tracked lower this year, BHP has enjoyed significant price momentum.

Which is the better buy?

For income seekers, BHP Group stands out in this match-up. Its dividend yield is considerably higher (3.90% vs 2.41%) and the payout itself is much larger in dollar terms. Both companies franking their payments at 100% makes those dividends especially attractive for Aussies in favourable tax brackets.

Northern Star Resources offers a fully franked yield and exposure to gold for diversification, but its lower yield and negative YTD return make it a less compelling choice on income grounds right now.

If I had to choose one share for an income-focused portfolio today, I’d lean towards BHP. The big miner offers stronger dividends, consistent franking, and much better recent momentum. Unless I was super keen on gold exposure above all, my pick would be BHP for income.

The post Northern Star vs BHP: Which ASX share is better for passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.