The German broker said third-quarter production numbers were broadly encouraging with a raise in copper guidance and petroleum and iron ore guided to the higher end of the previous range.
With a June year-end, BHP is the next diversified major to report full-year earnings, added the broker.
“Given a still-strong iron ore price, coupled with a broadly improved commodity complex, we expect BHP’s net debt to reduce to USD8.8bn at year-end.
“Similarly, given elevated asset prices, we think that M&A is unlikely to be viewed as attractive by management at this stage of the cycle. “Therefore, we think that there is scope for a meaningful dividend to be paid.”
As a result, Berenberg has raised its final payout forecast to 10% of underlying EPS, or USD1.98 per share – taking the full-year dividend to USD2.99 per share and placing the stock on a dividend yield of c10%.
Shares were unchanged at 2,178p.