As one of the world's largest mining companies by market capitalisation, BHP Group (ASX: BHP) is a major player in the mining industry. The company operates across several continents, with significant operations in Australia, South America, and Papua New Guinea. BHP Group has a diverse portfolio, including iron ore, metallurgical coal, copper, and oil.
This diverse portfolio reduces the risk of individual commodities impacting the share price but also minimises any upside from short-term increases in these commodities. But crucially, the demand dynamics for iron ore and copper are strong in the long term. This makes it a standout amongst ASX mining stocks.
Also, one crucial appeal in buying into BHP is her steady tradition of dividend payouts. Currently, the company’s dividend yield stands at approximately 5.5% which although lower than its average of 9.5% per annum, is still attractive to those seeking income.
During the last five years, BHP’s share price has risen by over fifty per cent (excluding dividends) and surpassed the total market growth rate which stood at just approximately 23%. This expansion speaks about how the company holds a dominant position in the resources sector of the market and it is a continuous earner. An increase in share prices and additional divisions make BHP stock attractive in investment portfolios.
In terms of diversification into exploration and production, operationally efficient BHP is in a better position to withstand any market volatility. These commodities are in high demand at almost all times. Therefore, the target zones of the company – copper, iron ore, and coal serve as a solid ground for the stability in revenues. What is more, BHP’s recent record of iron ore, whereby prices outperform expectations, suggests strong prospects of this company making profits.
The demands of key international markets, especially big economies such as China, greatly affect BHP’s performance. Also, given that some analysts are expecting higher iron ore prices as well as potential fiscal stimulus adding to increased steel demands, BHP Billiton should gain from such macroeconomic conditions.
The oil & gas segment has been known for its cyclical nature. However, BHP Billiton with its diversified operations, strong business models, and strategic foresight still has strong footings in the ASX as a good long-term investment.
