Record profits and dividends were the standout numbers in BHP’s annual results statement on Tuesday, but one figure that did not appear in the statement was equally eye-catching.
Based on the latest annual payout of 325c (270p) up 8% and a share price of 2,345p, the yield on the shares is a meaty 11.5%.
Add in last year’s payment of 301c and, allowing for a bit of arithmetic leeway, investors have received a yield of 22% over 18 months.
In other words, anyone buying the shares in time to qualify for the last year’s interim (5 March 2021) will have received almost a quarter of their money back in dividends.
Throw in the in specie payment from the disposal of the group’s oil assets (worth a further 386c) and that return rises to 43%.
It is a huge reward in such a short time period and one you would have thought would have been reflected in the share price performance.
In fact, the opposite is true and the shares have been drifting gently in recent months.
Of course, rising inflation means the real yield is much lower but is the market now so blasé about dividends compared to say tech potential it doesn’t care or is it that investors think that it’s all downhill from here?
BHP was doing its best to reassure its owners that there is still plenty in the tank.
In complete contrast to Rio Tinto, its peer and partner on several mega projects, Mike Henry BHP’s chief executive was upbeat on the global economy largely due to recovery potential in China.
"We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold," he said.
Henry added that BHP was also on the front foot on its investment plans and will assess options to expand production at its top iron ore producing unit to 330mln tonnes a year and explore growth options in "future-facing" commodities like copper and nickel.
Brokers estimated that will cost US$10bn in future capital spending, which will squeeze the amount of cash generated in future, but Deutsche Bank suggests this is to meet its growth and decarbonisation ambitions, while if prices behave the iron ore expansion might add 170p to its asset value.
Acquisitions also look to be on the agenda and though it has been rebuffed so far by OZ Minerals that does not look likely to be the end of the story despite Henry hinting it might take it or leave it.
Possibly it is the prospect of big deals that is the reason for a dividend yield more in keeping with a business going bust than one clearly in rude health.
Veteran investors chastened by previous splurges will tell you that, rather like banks, the time to be worried about miners is when they have too much money not too little.
RBC analysts said in a note: "BHP retained $4bn of cash despite finishing with net debt of $300m, indicating to us that the balance sheet remains prepped for further M&A."
UBS said; “We remain cautious on the stock with a Neutral rating as we expect earnings & FCF to deteriorate in FY23 with costs lifting & prices falling; this would result in lower returns to shareholders."
Undoubtedly, the world’s economic situation is very uncertain but what kind of slowdown is being priced in to justify a plus 11% yield especially given the strength of a balance sheet where debt tumbled to just US$300mln.
Perhaps the answer really is as simple as people just don't rate dividends as they used to, in which case BHP has some serious thinking to do.