Share Name Share Symbol Market Type Share ISIN Share Description
Bhp Group Plc LSE:BHP London Ordinary Share GB00BH0P3Z91 ORD $0.50
  Price Change % Change Share Price Shares Traded Last Trade
  -16.60 -1.02% 1,606.00 5,597,102 16:35:06
Bid Price Offer Price High Price Low Price Open Price
1,607.40 1,608.40 1,628.60 1,599.20 1,606.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 34,886.18 11,854.27 126.27 12.8 33,920
Last Trade Time Trade Type Trade Size Trade Price Currency
18:28:19 O 184 1,614.54 GBX

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17/10/201918:49BHP GROUP PLC EX BHP BILLITON333
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2019-10-17 17:28:201,614.541842,970.75O
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2019-10-17 16:45:431,609.944,40870,966.07O
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DateSubject
17/10/2019
09:20
Bhp Daily Update: Bhp Group Plc is listed in the Mining sector of the London Stock Exchange with ticker BHP. The last closing price for Bhp was 1,622.60p.
Bhp Group Plc has a 4 week average price of 1,599.20p and a 12 week average price of 1,599.20p.
The 1 year high share price is 2,078.50p while the 1 year low share price is currently 1,460p.
There are currently 2,112,071,796 shares in issue and the average daily traded volume is 5,498,288 shares. The market capitalisation of Bhp Group Plc is £33,919,873,043.76.
05/10/2019
09:03
the grumpy old men: MOTELY FOOL Are Fortescue, Rio Tinto and BHP shares a buy for their dividends? Lina Lim | October 3, 2019 1:23pm | More on: BHP FMG RIO ASX iron ore miners ASX 200 iron ore miners BHP Group Ltd (ASX: BHP), Fortescue Mining Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) have all staged significant share price recoveries after iron ore supply woes throughout August. But are they a buy for their dividends, on current prices? What’s the outlook for iron ore? The iron ore spot price currently sits at around US$90 per tonne, while Chinese iron ore futures soared by more than 2% on Wednesday. I believe the market has largely internalised the news that the world’s largest iron ore miner, Vale SA, is returning to form after its tailings dam disaster earlier this year. The Brazilian miner maintained its 2019 iron ore and pellet sale guidance of 207–322 million tons, with sales expected to be around the mid-point of that range. With that in mind, the Australian government sees iron ore prices in 2019 averaging around $80 per tonne FOB, reflecting the full effect of supply disruptions and firm demand from China. However, it also expects the price to gradually decline to average $57 by 2021, as the seaborne market gradually returns to balance. In terms of global economies, China has maintained a steady level of steel production with its central bank announcing that it will continue to implement a prudent monetary policy and increase the strength of counter-cyclical measures. This should buoy the iron ore spot price and steel production levels. On the flip side, US manufacturing purchasing managers’ index (PMI) signalled that manufacturing business activity was contracting at a stronger pace than expected. This reflects lower consumer demand and a contraction in new export orders. In the short term, the iron ore spot price could maintain the US$80–90 mark as the Australian dollar continues to pivot lower on the back of lower interest rates. This could expose investors to both capital upside and strong dividends. In terms of dividend yield, Fortescue pays a whopping 14% gross yield thanks to its 195% increase in underlying net profit and 266% increase in earnings per share in FY19. This represents a 78% dividend payout ratio – a delicate position where there isn’t too much space to increase dividends, while a lower iron price could potentially lower dividends in the future. BHP and Rio Tinto, on the other hand, pay a 7.8% and 8.7% gross yield, respectively. Foolish takeaway Current market conditions are volatile as lower interest rates drive capital inflows into equity markets, while global economic is showing signs of sluggish growth. A short-term opportunity may exist for investors as iron ore prices remain steady and miners continue to reap the benefits of a higher spot price and increased steel production from China. However, investors should be wary of the medium–long term outlook and the implications that may have on dividends.
04/9/2019
18:12
ariane: Sharecast Broker tips: RBS, Anglo American, BHP, Kainos rbs gogarburn building Analysts at Berenberg lowered their target price on retail bank The Royal Bank of Scotland from 340p to 280p on Wednesday after management conceded that the lender was now unlikely to achieve a 12.0% return on tangible equity by 2020. Berenberg said that despite a challenging environment, RBS' strategy was delivering "profitable growth, meaningful cost reductions and substantial capital returns". But the German bank pointed out that for many investors, this was simply "not enough". In particular, Berenberg said many were struggling to look beyond the current margin pressure, which had prompted RBS' board to accept that it would most likely be unable to meet its return on tangible equity targets in time. The broker's analysts reduced their full-year 2020-21 EPS estimates for RBS by approximately 6%, mainly driven by lower net interest margins, compounded by lower expected buybacks. Berenberg's 2019 estimates, on the other hand, did rise modestly, but only reflecting non-operational effects. "Following these adjustments, we believe consensus EPS estimates remain 4-6% too low," said Berenberg. However, while disappointing, Berenberg believed the share price reaction to the news had been "too severe", particularly considering RBS' double-digit dividend yield. "We believe RBS is able to deliver a double-digit dividend yield, alongside share buybacks of circa £3.0bn over three years. However, these prospective returns are being ignored," they wrote. Berenberg, which reiterated its 'buy' rating on the group despite the target price cut, highlighted that RBS' efforts to bolster returns and offset revenue headwinds saw operating costs fall by roughly £170.0m during the first half. Guidance from the lender that full-year restructuring costs should be towards the lower end of the previously guided range of £1.2bn-1.5bn provided the analysts with further comfort. Deutsche Bank revised its ratings on London-listed miners on Wednesday as it said stocks were due a rebound after the summer selloff. "Like most cyclical sectors, mining corrected sharply through the summer months," it said. "Risk appetite has collapsed and global growth fears are back at the forefront. While uncertainty and macro risks are high, we see scope for a tactical rebound on a six-month horizon." DB added that iron ore prices have reset to more realistic levels and valuations are now someway below its mid-cycle targets. "Our mining valuation composite is now sending a clear buy signal; buying at current valuation levels has yielded an average six-month return of 23% and the sector has moved up in relative and absolute terms on every occasion," it said. "The pervasive fear in the market is that we enter a 2015 type slowdown which saw negative China and global steel demand for several quarters. While we expect a deceleration in China steel demand in the year ahead (2% in 2020 from 5% in 2019) we think a 2015 style slowdown is an overly pessimistic scenario." The bank said Anglo American remains its top pick. "The business is well diversified, valuation compelling and, at the current share price, the market is getting the 30% growth by 2022E almost for free." Deutsche upped its stance on BHP Group to 'hold' from 'sell', cutting the price target to 1,750p from 1,900p following the recent share price correction. "Our view that BHP lacks structural growth drivers is unchanged, however, capital discipline is holding and dividend levels should remain robust through the cycle," it said.
30/7/2019
06:53
waldron: MOTELYFOOL Iron ore miners tumble: Are Fortescue, BHP and Rio Tinto a buy? Lina Lim | July 29, 2019 | More on: BHP FMG RIO Dominoes falling in a row The iron ore spot price has stabilised around the US$120 per tonne mark while the S&P/ASX 200 (INDEXASX: XJO) index has just passed 6,800. This is in stark contrast to the ASX iron ore miners, which have struggled on the news that the world’s largest miner, Vale SA, would resume production at its Vargem Grade complex. This news has resulted in the following price movements in the past week: BHP Group Ltd (ASX: BHP) share price down 1.07% to $40.56 (at time of writing) Fortescue Metals Group Ltd (ASX: FMG) share price down 4.6% to $8.30 (at time of writing) Rio Tinto Limited (ASX: RIO) share price down 4% to $98.26 (at time of writing) Is this a buy opportunity? The iron ore bull run is perhaps at its cross roads as Vale SA slowly returns to form. The Brazilian miner said that the move to Vargem Grade will add approximately 5 million tonnes to annual production. We’ve known for a long time that Vale has been awaiting supreme court approval for the resumption of production at several mine sites. Last month, Vale SA received court approval to enable the full resumption of wet processing operations at its Brucutu mine. Brucutu has an annual production capacity of approximately 30 metric tonnes per annum (Mtpa) of iron ore. This represents 8% of Value’s annual output. Fast forward to today, and the Vargem decision will enable the partial resumption of dry processing operations, which will total approximately 5 Mt of additional production in 2019. If we piece together the initial statistics of the Vale disaster that resulted in a loss of approximately 90 million tonnes of an annualised supply of around 1.7 billion tonnes, it appears as though the market is very slowly coming back to equilibrium. The plateauing bullish fundamentals overshadow Fortescue’s June 2019 quarterly production report, which highlight a 22% rise in total ore shipped while citing sustained strong demand from customers. Foolish takeaway I believe the recent falls in BHP, Rio Tinto and Fortescue share price are, to some degree, a market overreaction. However, I am going to make the bold call that the top is in for ASX iron ore miners. On one hand, demand side fundamentals remain robust and the supply–demand imbalance will continue to persist in the short term. But it is evident that the market is slowly creeping back to an equilibrium and I find it highly unlikely that ASX iron ore miners will break out their old highs.
19/6/2019
20:56
the grumpy old men: Opinion Iron ore price is defying gravity, and nothing is bringing it down to earth Elizabeth Knight Business columnist June 20, 2019 — 12.00am The price of iron ore continues to defy both gravity and the warnings from a plethora of technical financial analysis that the metal price is in bubble territory. But tell that to the thousands of investors with shares in BHP, Rio Tinto and Fortescue. For them, watching the iron ore price hit new highs is a bonanza. BHP shareholders haven’t seen the stock at these levels since 2011, Rio’s share price hasn’t closed this high since 2008. At Wednesday's close BHP was up 2 per cent to $40.98 and Rio was up 1.94 per cent $105.71. The iron ore price is in bubble territory. The iron ore price is in bubble territory.Credit:Bloomberg And the pick of the bunch from a share price performance perspective, Fortescue was up more than 3 per cent on Wednesday to $8.78 and is at a near 11-year high. While riding the iron ore rise has been wonderful for shareholders, buying into this run seems like a pretty gutsy play requiring (let’s say) nerves of steel. The iron ore price can be volatile. Having said that it has been trending higher for most of this calendar year and on Wednesday rocketed up 3.7 per cent to $US112.28 - sending iron ore stocks off on a tear again. Related Article Water and mud from the failed tailings dam at Brumadinho in Brazil. The collapse of another Vale tailings dam and the impact of Cyclone Veronica on the Pilbara miners have removed 100 million tonnes of iron ore from the market this year. Iron ore Iron ore's darkish clouds create silver lining for Pilbara miners And here's why. If the current spot prices for iron ore remain at these levels Rio and BHP would produce a 50 per cent improvement in earnings per share in fiscal year 2020, while Fortescue’s earnings could be up by 170 per cent according to Macquarie’s calculations. Such an outcome would deliver a deluge of dividends. In recent years these major iron ore companies have demonstrated a more conservative approach to capital expenditure and a way more generous approach to rewarding shareholders with dividends and buybacks. The robust share price performances are also being fed by a positive broader sentiment on the sharemarket. There are two factors at play here. The first is increasing hope that the US central bank will take a more aggressive position on lowering interest rates. The second - and much less reliable - reason for market optimism is being generated by the slightly toned-down rhetoric in Donald Trump’s latest trade war tweets. Both these positives could prove fragile. However, the forces that are specific to iron ore are based on supply and demand fundamentals which are proving tenacious. Many had forecast that the disruption in iron ore supply that began with the Vale tailings dam disaster in Brazil in January would be on its way towards a resolution. It isn’t. Courts and regulators have taken control and the timing of the restoration of supply seems no closer - or at least no clearer. At the same time pressure on all mining companies to reassess the safety of their tailings dams is intensifying. Related Article Autonomous trucks at Rio Tinto's West Angelas mine. Mining Falling iron ore stockpiles in China latest fuel for local mining boom Major investors, led by the Church of England have banded together to form what they have called the Mining and Tailings Safety Initiative. This week it released a name and shame list of companies that had not responded to its request to provide details of their tailings facilities. This investor group accounts for assets under management of $US12 trillion ($17 trillion). BHP and Rio have produced audits of their tailings dams over the past couple of weeks. Meanwhile, heavy rainfall during the current quarter in parts of Vale’s operations has only added to the supply disruptions. Citi Research's New York-based analysts said this week’s iron ore rally came on the back of an increasing likelihood that Rio may not make some contract deliveries of higher grade ore for July and August. But while supply is constrained, the demand side of the equation is not easing which is leading to continued depletion of stockpiles in China. In a note to investors Macquarie said, "Chinese port stocks, one of the most watched indicators in the iron ore market, have fallen further to under 110 million tonnes, indicating a 25 million tonnes drawdown since the end of April 2019. It further noted that, "the falling inventories at ports suggest consumption continues to outpace seaborne arrivals". The size and frequency of Chinese government stimulus packages is playing a big part in the continuing high demand for steel - whose major ingredient is iron ore. And just how the latest round of China-US trade talks play out will also be a major factor determining China stimulus. Few, if anyone, is predicting that iron ore prices will remain at these elevated levels for another year but right now the forces that are pushing the price higher appear stronger than those that could bring it back to earth. Elizabeth Knight comments on companies, markets and the economy.
14/6/2019
06:55
the grumpy old men: Why the Rio Tinto share price is outperforming with the sector today Brendon Lau | June 14, 2019 | More on: BHP FMG RIO Race Many of the big ASX miners are outperforming the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index this morning after the price of iron ore hit a five-year high. The Platts Iron Ore Index, or IODEX, jumped to $US110.20 a tonne and has gained more than 50% since January, according to the Australian Financial Review. This pushed the Rio Tinto Limited (ASX: RIO) share price up nearly 2% to $103.82 this morning, while the BHP Group Ltd (ASX: BHP) share price added 1.1% to $40 and the Fortescue Metals Group Limited (ASX: FMG) share price surged 4.6% to $8.73. Iron ore in a seller’s market Worries about the supply of mainstream iron ore fines are reported to be behind the latest price surge and traders are expecting tight supply in July and August. It’s a seller’s market – at least in the short-term with some analysts predicting the price of the commodity could jump to US$120 a tonne by August. The strength of the steel making ingredient is defying the gloom cast over the Chinese economy from the ongoing trade spat between the US and China. This is largely based on two factors. The Chinese government may step up infrastructure construction to offset the slowing economy and that means greater demand for steel. The other factor is that profit margins for Chinese steel mills are still reasonably healthy. These mills will keep buying iron ore to produce steel as long as they can make a buck! Risk of a price correction in the second half But not everyone is a bull. Some analysts, including those from Citigroup, point out that profit margins of these mills are under pressure and have become razor thin in recent times and that the supply of residential property is outstripping demand, which leads to a real risk that steel production could fall in the second half of this calendar year. This isn’t a given so it’s probably a little premature to be selling off all your holdings in iron ore stocks. The high price of the commodity also gives me some comfort as it provides room for a fall without necessarily triggering a consensus profit downgrade cycle for these stocks. Foolish takeaway Many analysts have assumed an iron ore price that’s materially under US$100 a tonne, so even if the ore price were to fall 20% from its expected peak, that shouldn’t impact much, if at all, on share valuations. On the flipside, if iron ore prices stay higher for longer (and it seems to have a bit of a history of remaining stubbornly high) or if it only dips modestly, shares in our major iron ore producers can enjoy a consensus profit upgrade instead. But iron ore stocks aren’t the only group with a promising outlook. The experts at the Motley Fool have uncovered some gems that are well placed to outperform in 2019.
27/5/2019
08:02
grupo: BHP, Fortescue, & Rio Tinto higher as iron ore prices surge again James Mickleboro | May 27, 2019 | More on: BHP FMG MGX RIO ASX iron ore miners Although the market has had a subdued start to the week, that hasn’t stopped Australia’s leading iron ore producers from storming higher this morning. In morning trade the iron ore industry has been one of the best performing areas of the market thanks to yet another rise in the price of the base metal. Here’s the state of play at the time of writing: The BHP Group Ltd (ASX: BHP) share price is up 1.5% to $38.00. The Fortescue Metals Group Limited (ASX: FMG) share price has pushed 1.6% higher to $8.35. The Mount Gibson Iron Limited (ASX: MGX) share price has climbed 2.5% to $1.28. The Rio Tinto Limited (ASX: RIO) share price is 1.5% higher to $102.76. What happened with iron ore prices? Iron ore prices continued their rise on Friday and closed in on five-year highs. According to Metal Bulletin, the price of the benchmark 62% fines rose 1.5% to US$105.32 a tonne, leaving it trading within a whisker of its five-year high of US$105.78 a tonne. Gains were also made by both lower and higher grade ore. The price of the lower grade 58% fines rose 0.3% to finish the week at US$87.02 a tonne, whereas the higher grade 65% fines closed the week with a 0.7% gain to US$119.30 a tonne. What’s next for iron ore prices? The good news for shareholders of these miners is that all signs are pointing to further gains today after Chinese iron ore futures finished the week on a very strong note. In fact, futures contracts closed the week at a record high thanks to increasing demand from Chinese steel producers after a production ramp up and declines in stockpiles at Chinese ports. If this leads to further increases in iron ore prices this week, it wouldn’t be at all surprising to see the likes of BHP, Fortescue, and Rio Tinto continue their charge higher.
14/4/2019
13:05
loganair: Goldman Sachs reaffirms its neutral investment rating on BHP Billiton PLC (LON:BLT) and raised its price target to 1900p (from 1750p). With Iron Ore prices at mutli year highs and likley to go higher and with the oil price holding up very well it seems to me that Goldman Sachs are underestimating BHP share price going forward over the short term, over the next 6 to 12 months. BHP all time high was in December 2010 at £25. I can see of no reason why the BHP share price will not breach the £20 level and with the price of its commodities holding up or even rising I can see £21 on the cards.
11/2/2019
23:16
loganair: Is the BHP Group share price set for another rally as iron ore heads towards US$100/tonne? The iron ore price could be poised to surge over US$100 a tonne as Chinese traders return from the Chinese New Year break to play catch-up with the rest of the commodities market. In effect this would be a return to ‘boom time’ prices last hit in the midst of China’s once-in-a-generation construction super-cycle that caused demand for the core steel-making ingredient of iron ore to rocket. The price of the steel making ingredient surged 24% since the collapse of Vale SA’s Brumadinho dam in Brazil on January 25 and has rallied over 6% since the start of the Lunar New Year week-long celebrations in China to around US$92 a tonne. The tragic event sent the Fortescue Metals Group (ASX: FMG) share price surging 44% since the start of the year while the Rio Tinto (ASX: RIO) share price added 15% and BHP Group (ASX: BHP) share price added 3%. Iron ore heading to over US$100/tonne? However, the stock probably won’t be lagging for much longer with some analysts predicting that the iron ore price could jump over US$100 a tonne as commodity markets have a tendency to overshoot and undershoot to the up or downside. What will add to the volatility is the fact that no one knows how much production Vale will be taking off the market as the embattled miner had to stop operations in a number of its mines. Some of the closures have been ordered by Brazilian authorities who are inspecting the safety of Vale’s other tailings dams while some of the production stoppages were voluntary. Vale intends to ramp up production at its mines in other countries, but there’s speculation that other governments will also be issuing a stop-work order to Vale to check on its dams and that could leave the iron ore market in a supply deficit for weeks, if not longer. But the iron ore price isn’t the only thing to watch for this reporting season. There’s speculation (or rather hope) that BHP will unveil another capital return when it reports its result next Tuesday. This could be the trigger for the BHP share price to close the gap with its peers.
06/1/2019
07:53
p0pper: Not having had a special dividend before, will the BHP share price drop after this dividend as per usual divi's or as this is a one off will the share price remain the same? thanks to anyone in advance who knows the answer.
02/1/2019
00:03
loganair: BHP - Growth, long-term horizon, Deep Value an Australian Commodity Company with a Secure 5.5% Yield: BHP is an enormous commodities company with an enormous portfolio of assets. The company's asset portfolio is spread across materials essential to modern society. BHP has incredibly strong cash flow and has worked to maintain low debt levels and a respectable dividend yield throughout the downcycle. BHP's cash flow potential going forward makes the company a great investment, one that I highly recommend. BHP Group is an enormous commodity company with a market cap of more than $100 billion. The company operates in the copper, iron, coal, potash, oil, and gas industries. The company's operation in a variety of commodities means it is subject to cycles. Through this article, we'll see that the company's focused improvements of its financial position combined with its impressive asset portfolio make it a company I recommend investing in at this time. BHP Growing Asset Portfolio: BHP has a growing asset portfolio that'll provide the company with more secure earnings going forward. BHP's four segments have continued to reach record production, showing their incredible potential. The company has been focused on cutting cost as possible and has continued to earn incredibly strong EBITDA. The company's total EBITDA from its four assets is anticipated to reach $23.1 billion annually. That's incredibly strong for a company with a market cap of more than $100 billion and shows the company's earning potential. More so, the company's costs for all of its major earners are well below the current prices of the commodities. For example, the company's $10.06/barrel petroleum cost is less than 25% of the current crude oil prices. That shows the company's impressive cash flow potential from its assets and how profitable they are, even in a commodity downcycle. BHP Capital Spending: To grow its investment assets, the company plans to invest close to $10 billion annually. The company's impressive capital expenditure is well above its 2017 capital production and almost equivalent to the company's 2016 capital expenditure. That impressive capital expenditure is incredibly affordable and is equivalent to almost 10% of the company's market cap. That means that these impressive investments should help the company's cash flow to grow. BHP Project Cost Cutting: Looking at the company's Australia operations, the company managed to have record production at 7 mines while decreasing costs by 2%. The company's Queensland costs are well below current coal prices, allowing the company to earn cash flow. However, the company does anticipate near term 2019 Queensland coal prices as higher, due to higher strip ratios. The Olympic Dam mine, which focuses primarily on copper and uranium, has seen its ore increase. The company anticipates Olympic Dam production to increase going forward. The company's South Flank asset is also targeting first ore in 2021, which will help to increase the grade and lump proportion. These things should help the company's cash flow to increase. BHP Major Project Delivery: In the Americas, the company's Escondida mine, one of the largest copper mines in the world, has seen copper costs down 15% with record throughput. The company's volumes are expected to average 1.2 Mtpa to 2025, with unit costs at <$1.15 per pound. The company has maintained incredibly strong costs despite a decreasing grade. Going forward, the company anticipates production to continue at the current levels, which should mean continued revenue and earnings. That's incredible production in spite of the fact that the grade of the ore has declined some. The company also has desalination water secured, which will help to maintain stability and support costs. Overall, this asset will continue to provide billions of long-term cash flow BHP. BHP Oil Portfolio: The company's petroleum assets are another important aspect of its earnings. The company has 1 billion barrels in reserves replaced over the last decade, with finding & development costs well below its peers. The company's low finding and development costs of just over $20 will mean significant cash flow potential for the company. The company's current investments are profitable at less than $50/barrel. The company's pipeline of 8 projects has achieved average returns of >25%, which is an amazing return for shareholders. The company has continued to increase performance and improving its exploration and success rates. Low cost of lifting, with impressive assets, means strong earnings going forward. As we will see going forward, BHP's portfolio of assets and growth potential make it a strong investment. BHP Financial Position: BHP has an incredibly strong financial position, a financial position that it has been focused on improving. As a company at the bottom of a cyclical operation, in the immediate term, its finances are everything. BHP Financial Portfolio: BHP has an incredibly strong balance sheet that provides it with continued flexibility throughout the cycle. The company's balance sheet has been tested under a wide variety of price scenarios, and this shows that the company has a buffer for price movements. The company is targeting a net debt in the range of $10-15 billion. During a downcycle, the company expects net debt increasing to the upper end of the region, before it drops back down. This shows the company's financial strength; the company is keeping its debt in a downcycle low. The company has strong liquidity, with an undrawn $6 billion revolving credit facility, which shows the company's financial ability. BHP Shareholder Rewards: Going forward, the company plans to reward shareholders while maintaining flexibility. The company has focused on a minimum 50% payout ratio dividend, while providing additional rewards to shareholders. That dividend is currently almost 6%, which shows the company's strength. The company has paid out $9 billion over the minimum dividend since early-2016. The company was forced to cut its dividend in 2016 due to a tough commodity environment. The company's 50% payout ratio has been still below the progressive dividend, but the company's special dividend has grown to above the dividend while maintaining the company's strength. BHP Debt Balances: Looking at BHP's debt balances, the company has a very balanced debt maturity portfolio. The company has roughly $2 billion in annual debt due from now until 2026. Given the company's annual earnings of roughly $10 billion per year, that means that the company can comfortably afford the debt going forward. This helps to show the company's incredibly impressive financial strength. BHP Maximizing Returns: Overall, these strong financials, combined with the company's new dividend policy, will allow the company to have strong shareholder returns. The company has reduced its debt by $15 billion in two years, reducing net debt to a $10-15 billion range. The company has a new minimum 50% payout ratio dividend we discussed above which'll reward shareholders well. More so, the company plans to limit capital spending, with less than $8 billion in capital and exploration expenditure per annum until FY 2020. The company anticipates ROCE back to ~20% by FY 2022. That shows the company's improving financial profile, which will allow the company to continue to maximize in its investment while having strong returns. BHP's Challenges: Like all other major companies, BHP faces challenges. BHP's single greatest challenge is that the company is in a cyclical sector. Coal, copper, potash, and iron are all commodities that often deal with a cyclical pricing setup. As a result, the company's cash flow can vary heavily from year to year. Despite investors knowing the business is cyclical, the company's stock price varies with these cycles too. That means that I don't recommend this stock for investors with 1,2, or even 5-year timelines. Rather I recommend it for investors who have closer to a 10-year timeline. Still, in the event of a drawn-out commodity crisis, the company's stock price, cash flow, and even dividends could be punished heavily. As a result, as an investor, this is a risk you need to be open too. No one will know when the next commodity crash will happen, but there almost certainly will be one. BHP Valuation: Trying to put a direct price valuation on BHP is difficult, due to the fluctuation in commodity prices. However, I'll try and provide some guidance. BHP's net operating cash flow, which the company uses to retire debt and pay its dividend, is the single most important metric I recommend paying attention too. In 2016, the company's net operating cash flow dropped to a mere $14.6 billion in the commodities crash. However, it has since rebounded. Still, these levels are 20% below 2014 when the crash started. However, BHP dividend payment is paying similar to what it was before the crash. As the company's cash flow recovers, which I anticipate to be over the next few years, as commodity prices stabilize and costs are cut, its share price should recover further. BHP is currently trading at 30% below its mid-2014 highs, while cash flow has dropped 14%. As a result, I think the company is roughly 16% undervalued at this time. As its cash flow increases, I expect the company's share price to increase in turn. This also means as a catalyst for investors to pay attention to, pay attention to the company's cash flow as it reports it in 2019. Should the company miss cash flow numbers drastically, if it's commodity price related, that's a risk, but if it's due to poor management, I'd recommend selling your shares. However, even right now, when you invest, you're getting a growing commodities company, with strong cash flow, and a dividend yield of more than 5%. That company is trading at 16% below what it should be based off of its cash flow. Conclusion: BHP has low cost assets, which means continued cash flow during the downcycle. As commodity prices recover, the company's stock price should return to mid-2014 highs, which will provide investors with strong returns. At the same time, the company's financials are set up for a market crash, and the company continues to pay investors a 5.5% dividend. These things together make the company a rewarding and strong investment decision. I recommend investing in BHP at this time.
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