As the financial world eagerly awaits BHP Group Ltd's (ASX: BHP) half-year results, scheduled for release on Tuesday, February 20, market enthusiasts and investors are on the edge of their seats, curious about what this mining giant has in store.


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BHP's Half-Year Results Preview

Iron Ore Prices Dictate Expectations

The first half has witnessed robust performance in iron ore prices, setting the stage for high expectations in BHP's upcoming results. According to insights from Goldman Sachs, analysts are forecasting a first-half revenue of US$27,595.57 million. This represents a significant increase of 6.2% from the US$25,982 million reported a year ago.

Earnings Outlook

Consensus Estimates

The optimism extends to earnings, with the consensus estimate pegged at US$1.43 per share. This projection indicates a noteworthy 10% surge compared to the prior corresponding period.

Dividend Dilemma

Capital Expenditure Challenges

While the market anticipates positive outcomes in revenue and earnings, investors eyeing a potential dividend windfall might face disappointment. Several brokerage firms express concerns that BHP could find itself compelled to reduce its payout ratio due to a substantial uptick in capital expenditure.


The team at Morgans provides insight into this concern:

"Moderating dividend. We expect a lower dividend payout ratio of 55% in the first half, marking the lowest level of earnings paid out since 2018. This assumption is grounded in the rise in investment, with capital expenditure experiencing a significant +60% yoy increase and net debt ranging between US$12.5 billion to $13.0 billion, versus the target range of US$5 billion to $15 billion. Despite a potential dip in dividends, BHP maintains an attractive dividend yield profile, even with a stronger share price year over year."


If this prediction materializes and BHP aligns with the consensus estimate for earnings, investors can anticipate a dividend of 78.65 US cents per share, a decline from the 90 US cents reported a year earlier.

BHP's Strategic Moves: A Key Aspect to Monitor

Capital Expenditure Surge

Striking a Balance

Amidst the dividend debate, BHP's noteworthy +60% yoy increase in capital expenditure sparks discussions about the company's strategic moves. This surge in investment suggests a commitment to future growth and development. The potential trade-off between immediate dividend satisfaction and long-term growth raises questions about BHP's broader business strategy.

The Market's Reaction: Analyst Insights

Morgans Team Perspective

The analysts at Morgans anticipate a moderation in dividends, attributing it to the simultaneous rise in capital expenditure and net debt. While this could translate into a lower dividend, the team highlights BHP's enduring appeal due to its robust dividend yield profile. The delicate balancing act between immediate shareholder returns and sustained growth forms a crucial narrative in BHP's financial story.

Anticipated Dividend Figures: A Closer Look

The Numbers Game

If the speculated 55% dividend payout ratio becomes reality, BHP's dividend would land at 78.65 US cents per share. This figure, while a dip from the previous year, underscores BHP's commitment to fiscal prudence in the face of increased investment and debt.

Conclusion: Navigating the Financial Landscape

In conclusion, BHP's upcoming half-year results carry significant weight in the financial landscape. The interplay between robust revenue, earnings growth, and a potential dividend adjustment reflects the complexities of navigating a dynamic market environment.


As investors eagerly await the unveiling of BHP's financial performance, the delicate balance between rewarding shareholders in the short term and fueling long-term growth remains at the forefront. BHP's strategic choices, particularly the surge in capital expenditure, add an intriguing layer to the unfolding narrative.