How to generate $50,000 of passive income from BHP shares


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When it comes to dividends, BHP Group Ltd (ASX: BHP) shares are a popular option for investors.

That’s because each year, the Big Australian rewards its shareholders with billions of dollars in dividend payments.

But what would it take to earn a $50,000 passive income from the mining giant’s shares?

$50,000 from BHP shares

First things first, we need to find out how big the BHP dividend will be in 2023.

According to a note out of Morgans from last week, the broker is expecting the miner to pay a US$2.11 (A$3.00) per share fully franked dividend in FY 2023. Based on the current BHP share price, this will mean a 6.1% dividend yield for investors.

So, in order to generate $50,000 of income from BHP shares, you’ll need to own approximately 16,667.

This is the equivalent of an $822,000 investment at today’s prices.

That is of course a hefty sum of money, and few people are lucky enough to have that available to them. But don’t let that put you off trying to achieve this goal over the long term.

Getting there the long way

If you want to grow your portfolio to be worth $822,000, you just need a combination of time, patience, and discipline.

Over the last 30 years, the Australian share market has provided investors with an average return of 9.6% per annum.

And while past performance is no guarantee of future returns, this is consistent with what share markets have provided globally over the long term. As a result, I believe it is a realistic number to aim for over the next 30 years.

If you are able to invest $10,000 each year and earn the market return of 9.6%, in 23 years you will have grown your portfolio to approximately $825,000.

At that point, if you invest those funds into ASX shares offering a 6.1% dividend yield, like BHP shares are today, you will be generating $50,000 of passive income without having to leave the sofa.

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