BHP Billiton reported a 31 percent rise in first-half profit on Tuesday and signaled it would consider a dividend hike in August, as it cuts debt towards levels that may prompt a share buyback.
After achieving annualized cost savings of $4.9 billion, slashing capital spending and reducing debt, the world's biggest miner showed confidence in its surging cashflow, although it did not come up with a dividend surprise like rival Rio Tinto last week.
"We will consider the trajectory of our progressive base dividend at the end of the 2014 financial year," BHP said in its results statement.
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It expected to generate strong free cash flow which would help it pare net debt to around $25 billion by June 2014, a target at which Chief Executive Andrew Mackenzie has said the company would be willing to consider returning capital to shareholders.
"We are well placed to extend our strong track record of capital management," the company said.
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Big miners have been shelving projects, cutting costs and selling assets over the past 18 months to satisfy shareholders wanting a bigger share of spoils from the mining boom.
BHP said commodity demand should be supported at "more moderate rates of growth" until mid-year as the global economy is expected to strengthen.
Net debt fell to $27.1 billion, down $422 million from June 30, 2013.
Underlying attributable profit rose to $7.76 billion for the six months to December, up from $5.94 billion a year earlier. Analysts had been expecting a profit of $6.925 billion on the same basis.
"The dividend was slightly below what I was expecting, which was around 60 cents," Morningstar analyst Mark Taylor said on a first look at the results.
Profit from iron ore, its biggest business, rose 60 percent on the back of mine expansions, while petroleum earnings fell 16 percent, and copper rose just 0.4 percent.
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BHP raised its interim dividend by 3.5 percent to $0.59 a share, slightly below consensus but in line with its normal practice of paying an interim dividend at the same level as the final dividend from the year before.
BHP's Australian shares closed at A$38.02 on Monday ahead of the half-year results, down 1.7 percent over the past year and underperforming a 6.3 percent rise in the broader market.