With fears of a global trade war easing once again after a positive speech from China's President Xi on Tuesday, I feel confident that the strong global growth that was predicted in 2018 will materialise.
As strong global growth is likely to lead to robust demand for commodities, I think now could be an opportune time to consider making an investment in the resources sector.
Here are three top shares that I would consider:
BHP Billiton Limited (ASX: BHP)
My first pick in the resources sector would have to be mining giant BHP Billiton. I believe that at the current price its shares are very attractive and offer investors both value and income. Especially given that its high-quality assets and the rosy outlook for the key commodities that it produces puts it in a strong position to deliver another bumper profit result in FY 2018. Furthermore, I believe the company is likely to lift its generous dividend over the next couple of years. At present it provides investors with a trailing fully franked 4.3% yield.
Rio Tinto Limited (ASX: RIO)
If the global economy continues growing strongly then I believe demand for the commodities that Rio Tinto produces will remain robust and support favourable prices. This should put the mining giant in a position to deliver solid earnings and dividend growth for the next couple of years at least. Another key bonus is its sizeable cash balance following its recent exit from the coal industry. This is likely to be returned to shareholders through dividends and share buybacks. Rio Tinto's shares currently provide a trailing fully franked 4.8% dividend.
Western Areas Ltd (ASX: WSA)
While a lot of investors are focusing purely on the lithium miners when it comes to the electric vehicle boom, it is worth remembering that many lithium-ion batteries contain nickel. If the growth of electric vehicles continues as expected and there are no changes to battery technology, I believe demand for nickel will grow strongly over the next few years. This could put Western Areas in a position to deliver above-average earnings growth for the foreseeable future.
