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· Posted on
February 21, 2024

BHP could up its dividends to shareholders after saying bye-bye to oil and gas

BHP are the golden child of Broken Hill (aka the BH in BHP).

What's the key learning?

  • This year, BHP sold their oil and gas assets to Woodside Petroleum
  • This means that BHP's total expenses could be reduced pretty significantly...which means they could return more dividends to their shareholders, depending on its capital allocation
  • Capital allocation is all about how a company’s CEO or board decides to spend the money that the company has on its balance sheet.

Background: BHP are the golden child of Broken Hill (aka the BH in BHP). They're the $120 billion Aussie-born mining company that went onto become one of the biggest miners in the world.

What happened: This crew went through a massive change this year. They sold their oil and gas assets to Woodside Petroleum, which marked a pretty big step towards BHP's plans to go green.

What else: Once the sale is complete, BHP's total expenses could be reduced pretty significantly...so naturally, it's expected that investors will receive a beefed-up dividend payment. But, it just depends on BHP's capital allocation.

So what's the key learning?

💡Capital allocation is all about how a company’s CEO or board decides to spend the money that the company has on its balance sheet.

💡The 'capital' on hand might be allocated towards:

  • Re-investing in the operations of the current business to make it more efficient
  • Invested in future projects to generate new revenue streams
  • Paid out to investors as a little reward in the form of dividends.

💡So with less expenses and more money in their back pocket, shareholders just might get a bigger slice of the BHP pie.

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