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Investors will eagerly await the release of BHP Group Ltd (ASX: BHP) half-year results next week, as the mining giant is expected to unveil its financial performance on Tuesday, February 20.
With iron ore prices maintaining robust levels in the first half of the year, market expectations are high for BHP's upcoming results. Analysts at Goldman Sachs anticipate the company to report first-half revenue of US$27,595.57 million, representing a 6.2% increase compared to the same period last year when revenue stood at US$25,982 million. ASX mining stocks, including BHP, have been closely watched amid the strong performance of commodities like iron ore. BHP's anticipated revenue growth underscores the favorable market conditions driving the mining sector's profitability.
Similarly, earnings are forecasted to see growth, with the consensus estimate at US$1.43 per share, marking a 10% rise from the prior corresponding period.
However, investors anticipating a significant dividend payout may be disappointed, as several brokers anticipate a reduction in the payout ratio due to a substantial increase in capital expenditure.
The team at Morgans predicts a moderation in the dividend payout, expecting a lower payout ratio of 55% for the first half. This would represent the lowest level of earnings paid out since 2018. The assumption is based on the rising investment, with capital expenditure increasing by 60% year-on-year, and net debt reaching US$12.5 – $13.0 billion compared to the target range of US$5 – $15 billion.
If the predictions hold true and BHP meets the consensus estimate for earnings, it would result in a dividend of 78.65 US cents per share, down from 90 US cents per share reported a year earlier. Despite the potential decline in dividend, BHP still offers an attractive dividend yield profile, particularly against a backdrop of a stronger share price year-on-year.
