BHP Group is arguably the most well-diversified mining and exploration company there is. It is a part of every investor’s portfolio for different reasons – maybe for the stable dividends, or to decrease the overall volatility of the portfolio. BHP shares are also one of the best blue-chip stocks that trade on the ASX.
Twenty years ago, Australia’s most valuable company merged with a British firm to make BHP-Billiton: the biggest miner on earth, extracting minerals from the Pilbara to Peru. BHP is dual listed on the ASX and the LSE. A few months ago, BHP decided that they would delist from the LSE. This will mean that all its shares and value will come to the ASX.
BHP is no minnow in London. BHP is the second most-valuable company listed on the London Stock Exchange behind pharmaceutical giant AstraZeneca.
As Iron Ore prices reached a record high and then crashed, so did BHP shares. However, the resurgence has begun and BHP shares have gained 14% in the past month. BHP is already a $227 billion company on the ASX. Delisting from LSE will only make it bigger.
The ASX 200 already has quite a few mining stocks and it will become bigger. This will increase the bias towards mining.
BHP is of stunning value to investors. It is especially the case for its lucrative dividend of US$ 3.01 per share representing a solid payout ratio of 89%. The record dividend was the result of operational excellence throughout the year with a solid performance that led to consistent free cash flow generation and an efficient margin of 64%.
Looking forward, BHP is also streamlining its business. Hence, we have seen Woodside Petroleum and BHP announcing their intention to enter a merger commitment to combine their respective oil and gas portfolios. The outcome will be an all-stock merger to create a global top ten independent energy company. This move from BHP will pave the way for the resource giant to move into the Potash business and further focus on developing a net-zero company.
Growth stocks will be devalued when interest rates eventually rise. Threfore, we expect a lot more money to flow into the likes of BHP in the coming weeks.