The BHP Group Ltd (ASX: BHP) share price is under the spotlight this week as the resources giant is about to reveal the FY22 half-year result.
What will the BHP result show?
I don’t have any insider information about the numbers, but it’s going to be an interesting one in my opinion.
The resources giant has certainly seen a lot of volatility over the last 12 months. The iron ore price has been on a rollercoaster. It’s been both materially above $200 and below $100. The lion’s share of BHP’s profit comes from iron ore. So, the recovery of iron ore will help the business and could feature in comments about its outlook.
We already know that iron ore production was strong in the first half of FY22, with a total of 129.4mt – up 1% year on year. This is very important for the BHP share price.
Production for copper and nickel were down a bit, but oil production was solid.
There are a lot of moving parts to BHP, but I think the HY22 profit result will be good. I like BHP more than Rio Tinto Limited (ASX: RIO) because of that diversification.
Dividend
Obviously, BHP pays its dividend from the profit. If the profit is big, then the dividend should be good too.
No-one on the BHP board has told me about what the interim payment is going to be.
But anyone can have a guess at what the dividend might be. CommSec has an estimate of an annual dividend of $3.78. That’s a fully franked yield of 7.8% at the current BHP share price.
Potash
I’m interested to see if BHP talks more about the Jansen potash project. It seems like a very compelling commodity, with lower carbon emissions and a high profit margin in EBITDA terms.
If BHP can continue to focus on greener commodities then I think that would improve its ultra-long-term sustainability as well as give investors more of an insight into the direction that the business is headed. More and more investors are including ESG considerations into their investment decisions. Fortescue Metals Group Limited (ASX: FMG) might be leading the way here.
The more BHP makes green moves with its portfolio, the more likely I am to consider it for my portfolio during resource price plunges.
BHP share price thoughts
BHP shares have risen 14% since the start of the year. It’s a compelling blue chip, with plenty of good quality commodity projects. At the right time, a resource business can be worth be jumping. But I don’t think that’s now, with the iron ore price above US$150 per tonne. If it were to drop below US$100 per tonne then it could be an opportunity.
