BHP rallies to all-time high as copper earnings surge, dividend jumps 44%

BHP (ASX: BHP) is on track to have its best day since March 2020 after reporting a broadly better-than-expected first half result. The stock is up 7.0% in early trade to a record $53.90, with year-to-date returns now sitting at almost 20%.

The key numbers from the 1H26 result include:

• Revenue up 11% to $27.9bn vs $27.34bn ests (2% beat)

• Underlying EBITDA up 25% to $15.5bn vs $15.11bn ests (3% beat)

• Profit from operations up 34% to $12.3bn vs $11.93bn ests (3% beat)

• Underlying EPS of $1.22 vs $1.21 ests (1% beat)

• Interim dividend of US$0.73 per share with dividend payout ratio of 60% vs. Macquarie ests of US$0.69 (5.7% beat)

• Adjusted effective tax rate of 36.6% (43.0% including royalties)

The first talking point in the results release for Chief Executive Mike Henry was copper earnings: "This half marks a milestone for BHP with Copper contributing the largest share of our overall earnings, at 51% of Underlying EBITDA. BHP is the world’s largest copper producer and with strong performance at Escondida, and solid contributions from our other operations in Chile and South Australia ..."

The strong operational performance resulted in an upgrade for the Group's FY26 copper production guidance to 1.9-2.0 million tonnes, tracking slightly above Macquarie forecasts of 1.94 million tonnes.

In addition to the copper breakthrough, "WAIO achieved record first half production and shipments and we further strengthened our position as the world’s lowest cost major iron ore producer," noted Henry.

BHP also announced a silver streaming agreement, representing its 33.75% share of production from the Antamina mine to Wheaton Precious Metals for $4.3 billion upfront, plus 20% of spot silver prices on delivery. This silver stream sale is seen as a means of funding the company's copper expansion, which includes a new concentrator at Escondida and development projects Vicuna and Copper SA.

Economic outlook

Every BHP result contains closely watched commentary about the global economy, commodity demand and costs. Some of the key takeaways include:

• IMF forecasts global growth at 3.3% for 2025, slowing to 3.0% in 2026, with fiscal and monetary support continuing to underpin commodity demand across major economies.

• China hit its 5% growth target for 2025, with trade surplus exceeding US$1 trillion for the first time. Copper demand surged 8.8% in H1 2025, while steel exports compensated for weaker domestic consumption.

• India's economy exceeded 7% GDP growth in 2025, driven by household demand and investment. Ongoing capacity additions across steel and copper value chains are boosting commodity consumption.

• Cost environment remains structurally higher than pre-COVID levels. Australian inflation sits above RBA's 2-3% target, while Canadian industrial construction costs jumped over 12% in two years.

• BHP emphasises productivity and cost discipline as critical in the new higher-cost environment, noting competitive advantages for low-cost diversified producers.

The bottom line

Mining results rarely contain surprises given companies report production quarterly. Yet today's first-half result from BHP marks a major step change in the business, offering investors rare large-cap exposure to a company that's increasingly copper oriented.

Despite the broadly positive result, there are still some areas that require further clarification, including:

• CMRG negotiation: BHP is currently negotiating annual contract terms with China Mineral Resources Group. RBC Capital Markets noted back in January that "recent pricing suggests a relative repricing within BHP's WAIO iron ore product suite, where the product is experiencing wider discounts than in prior (seasonal) cycles". The outcome of these negotiations could result in some material outcomes for iron ore earnings.

• Jansen's stage one capex blowout remains a hot topic.

• Macquarie analysts are looking for commentary on higher payouts, relaxing gearing constraints and/or further infrastructure sales.

• Other talking points include the long-term fit of coal assets.

The silver streaming agreement, combined with a previously announced US$5.7 billion deal with Global Infrastructure Partners (GIP) for a 49% stake in BHP's Nickel West power infrastructure in Western Australia, is set to unlock up to US$10 billion in capital. This portfolio funding strategy allows BHP to monetise non-core assets while maintaining operational control and redirecting capital toward strategic copper and potash developments.

The strong operational performance plus rising commodity prices has seen a sharp 44% increase in the interim dividend to US$0.73 cents per share at a modest payout ratio of 60%. Overall, the result underscore's BHP's transformation into the world's premier copper producer while maintaining its low-cost iron ore leadership.