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BHP dividend to jump 150% predicts broker

Berenberg believes BHP has significant capacity to pay excess dividends

BHP Group PLC -

Dividends will be the focus in BHP PLC’s (LON:BHP) annual result statement on 16 August, with broker Berenberg expecting a bumper payout from the mining titan.

Recent production numbers were in line with estimates, said the broker, as were the forecasts for next year.

Berenberg believes BHP has significant capacity to pay excess dividends, given strong FCF generation thanks to high commodity prices.

It has estimated a dividend payment of US$3.05 (US$1.20), or 94% of underlying earnings, to give a yield of about 10% at 2,2406p.

“We believe this is achievable given our forecast US$4.5bn reduction in net debt over FY21 to US$7.5bn, which remains well below the US$12- 17bn guidance range.”

One other thing to watch for is an investment decision for potash project Jansen, which the company has said is on track for a go or no-go decision within the next two months.

But with 2,700p target is Berenberg’s view.

Quick facts: BHP Group PLC

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Price: 1776.2 GBX

Market Cap: £89.83 billion

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