BHP Stock and Dividend: What to Know

BHP Stock and Dividend: What to Know

Key Points

  • BHP Group Limited is a high-yield stock. 
  • The payment is reliable but may be erratic in size. 
  • The new, streamlined company is positioned to pay dividends long into the future. 

BHP stock and dividend are interesting for their history and high yield. What to know about BHP stock and dividend is that this is one of the world's largest mining operations. It is fundamental to the global supply chain and pays a safe dividend. 

The dividend is managed by a distribution plan that seeks to return a high level of capital to shareholders while maintaining fiscal discipline and a healthy balance sheet. When you finish this article, you will know everything you need to make an informed decision about this stock and how it may fit into your high-yield portfolio. 

About BHP Energy

BHP Energy is, or was, the petroleum branch of BHP Group Limited. The assets included in BHP Energy merged with Woodside in an all-stock exchange in 2022. The merger created a standalone company and allowed BHP to divest itself of the last of its non-core assets so it could focus on mining. BHP investors received shares of Woodside in the form of a dividend. 

BHP Stock Overview

BHP Group Limited (NYSE: BHP) formed through the merger of BHP and Billiton plc. Both started in the 1880s in Australia's mining outback. BHP and Billiton operated independently until 2001. At that time, the company engaged in an aggressive round of acquisitions that expanded its reach within Australia and grew the business into international operations and even oil production. 

The merger created one of the world's largest mining operations, but it has since been pared back from No. 1 to No. 2 in terms of revenue. The company began divesting itself of non-core assets and other dead weight in 2017, leaving it in leaner and more profitable shape. That includes the merger and spin-off of the energy assets and under-producing and difficult-to-operate mining locations. 

The company operates in five segments: nickel, iron ore, coal and copper. Each segment produces secondary minerals but focuses on the primary target. The company's operations are centered in Australia and include more than two dozen mines in five of the 10 Australian territories. Operations outside Australia are scattered worldwide, including mines in Canada, the U.S., Mexico, Brazil, Chile and Algeria. 

BHP was a dual-listed company with shares traded on the London Stock Exchange and the Australian Stock Exchange. The company relinquished that status in 2022 and is now traded solely on the Australian Exchange. 

Price History and Performance: BHP

BHP Group stock price history is volatile, showing the impacts of shifting commodity prices and the company's restructuring efforts over the past two decades. The takeaway for today is the company's business supports the market and long-term demand for industrial metals but revenue, earnings and dividends may fluctuate over time. What is the stock price of BHP? The better question: what do the earnings look like and how does that affect the dividend? Regarding volatility and when to sell dividend stocks, long-term investors should view price pullbacks as times to buy more shares. 

Earnings and Revenue

BHP Group Limited produced more than $54 billion in revenue for fiscal 2022 and the outlook is bright. Although there is a risk of global recession going into 2023, the long-term global outlook for steel and industrial metals remains strong. Earnings for the year topped $12 per share and fueled dividends of $6.50 or nearly 10% in yield. 

Why buy dividend stocks? In this case, it's the 10% yield and outlook for reliable payments, if not a steady payout. 

Dividend Safety 

BHP stock dividend is safe because it is a managed distribution. How dividend stocks work is to pay investors profits, but the company also needs to maintain its health. This company aims to pay 50% of its earnings which is a manageable and safe figure that allows for growth, but there is a risk. Demand, commodity prices and production costs impact earnings and may vary from quarter to quarter. This may result in an erratic distribution amount or even a decline in the payout. Something that can mitigate this is owning more than one dividend stock, but how many dividend stocks you own is up to each investor. 

Dividend Reinvestment Program 

Investing in top dividend stocks is time-consuming, but BHP investors can participate in a dividend reinvestment program or DRIP. The plan is available to shareholders of record. You can use dividends to purchase shares in tandem with the distribution, and shares deliver to shareholder accounts. 

BHP Energy Dividend History

BHP Billiton stock has a strong history of dividend payments and dividend growth. The company has been paying a dividend since 1984 and tends to increase over time. The catch is that the company pays its dividend twice annually versus the usual quarterly payments and has a dividend policy. The company aims to pay out at least 50% of earnings at each pay period and may pay more if the board deems it appropriate. The pay periods are in March and September, with declarations coming out the month before. 

BHP Energy Limited Competitors 

BHP competitors include companies like Glencore plc, Rio Tinto and Vale. These comprise the top five mining companies worldwide, including China's Shenhua Energy. Glencore's operations are more than five times as large as BHP and span a much larger footprint. BHP focuses on Australia, with some operations in North America and elsewhere. 

Dividend Capture Strategy for BHP Stock

The dividend capture strategy for BHP stock is simple to execute and aims to earn or "capture" the dividend by owning it for the shortest time. The strategy centers on some important dates, including the declaration day, the ex-dividend day and the day of record. 

  • Dividend declaration day: The company announces or declares that it will pay an upcoming dividend on the dividend declaration day. The declaration may come alongside, before or after the quarterly earnings report and includes the dividend amount, the ex-dividend day, the date of record and the day of distribution. 
  • Ex-dividend day: The ex-dividend day is the last day an investor can buy the stock and receive the dividend. The only requirement is that investors buy the stock on that day and be owners at the close of trading. This day is usually at least a few days, if not a week or two or even a month after the declaration. 
  • Date of record: The date of record is the day after the ex-dividend date. The date of record is the first day an investor who buys the stock will not get the upcoming dividend payment. Investors who own the stock before the start of trading and bought it on the ex-dividend day will be recorded as eligible for the dividend. Everyone else will have to wait until the next dividend declaration. 
  • Date of distribution: The date of distribution is the day the company will pay or distribute its dividend to shareholders. Any shareholder at the end of trading on the ex-dividend day will receive the dividend regardless of whether or not they own the stock. 

By now, it is easy to see that the dividend capture strategy can be attractive. After all, you can earn a high quarterly yield with BHP stock, but there are risks. Investors may find themselves holding the stock for more than just one day because the stock price tends to fall on the day of record. This is because the stock is now trading without the value of the dividend, and those looking to "capture" the dividend may already be selling. 

Future Growth for BHP Group

BHP Group growth ties to the demand and price for its metals. Because its metals are the base ingredient for modern industry, it will be in demand for the foreseeable future. The growth trajectory is upward because of the growing global population, the modernization of under-developed regions and the maintenance of existing infrastructure, but the company will see ups and downs driven by demand and business cycles 

BHP Group Limited: A High Yield with Risks 

BHP Group Limited is a great company with a solid business that is fundamentally important to the entire global supply chain. With the metal this company produces, there would be more steel, aluminum and industrial metals worldwide, but inventors will take risks. The company's stock price is volatile and the dividend is erratic. The company can pay a dividend, but when and how much? The good news is that distributions are trending higher over the long term if showing volatility on a payment-to-payment basis. 

FAQs

Let's take a look at a few frequently asked questions about BHP.

Is BHP a good stock to buy?

Is BHP a good stock to buy? That depends on the account, the investors and the strategy. BHP is the world's second-largest mining company and is a good stock to buy. Investors looking for safety, reliable dividends and a low beta may look elsewhere. 

Is BHP stock overvalued?

BHP stock price tends to trade at fair value. However, this leads to volatility because the commodities market tends to change rapidly due to supply and demand imbalances. 

What is the forecast for BHP shares? 

BHP shares tend to move in tandem with commodity prices and demand and may experience volatility in the near-, mid- and long-term. Shares of BHP have been trading in a wide range since 2005 and should continue moving within that range. 

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Companies Mentioned in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
BHP Group (BHP)$61.03-0.5%5.19%N/AHold$37.33
Thomas Hughes

About Thomas Hughes

Experience

Thomas has been a contributing writer for DividendStocks.com since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

A.A., culinary technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 

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