Why BHP shares made our headlines this week

BHP shares could be set to benefit from a decade of global underinvestment in new resource projects.

| More on:
An old-fashioned news boy stands on a stool and yells through a microphone in an open field.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BHP Group Ltd (ASX: BHP) shares have recouped their morning losses and are up 0.2% at the time of writing.

The S&P/ASX 200 Index (ASX: XJO) iron ore miner is currently trading for $44.32 per share. That's up 1.9% from last Friday's closing price.

Created with Highcharts 11.4.3BHP Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

That's the latest price action for you.

Now, here's why BHP shares made our headlines this week.

What's been happening with BHP shares?

The ASX 200 iron ore giant popped into The Motley Fool headlines on Monday after Ben Cleary, portfolio manager for the Tribeca Global Natural Resources Fund, said BHP shares could trade for $100 apiece over the longer term. That's 126% higher than the current price.

Cleary said that supply constraints for industrial metals were looming, despite fears of a global recession and some slower-than-expected short-term demand from China.

He noted that there's been a "decade of underinvestment in new projects, while demand is continuing to build amid the transition to a decarbonised world".

And he pointed to ongoing strong credit growth in China as likely to fuel demand for iron ore.

"We just think it's a great time to be adding exposure to the sector, and we have been, despite the uncertain environment we're in," Cleary said.

Indeed, on Thursday BHP shares were back in our headlines as the miner outpaced the ASX 200, closing the day up 1.2%.

That came on the back of a 2.8% overnight increase in the price of iron ore, to US$110 a tonne.

Why did the price of the steel-making metal lift-off?

Well, mostly thanks to China, where new home prices increased 0.3% across 70 cities in April.

"The market is hoping this is a harbinger to a pick-up in steel output," ANZ economist John Bromhead said.

"Optimism was further fuelled after China's NDRC pledge to keep boosting loans to the manufacturing sector," he added.

Let's not forget the juicy BHP dividends

BHP shares also made our headlines this week thanks to the miner's fully franked dividends.

The ASX 200 miner currently trades on an 8.8% trailing yield.

And Goldman Sachs believes BHP shares will continue to deliver above-average dividend yields over the next two years.

The broker is forecasting the miner will pay dividends of $3.08 in FY23 and $2.45 in FY24.

At the current share price, that comes out to a yield of 7% in FY23 and 5.5% in FY24.

Goldman also has a $49.90 12-month price target on BHP shares. That's 12.6% above the current price.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

Does Wilson Asset Management prefer Rio Tinto or BHP shares?

Which miner is in favour?

Read more »

Two smiling men in high visibility vests and yellow hardhats stand side by side with a large mound of earth and mining equipment behind them smiling as the Carnaby Resources share price rises today
Resources Shares

Macquarie tips this ASX 200 resources stock to soar nearly 40%

Big returns could be on offer here according to the broker.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Resources Shares

Bell Potter says this ASX 200 mining stock can rise ~30%

Let's see why this miner could be destined to deliver big returns over the next 12 months.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Up 23% today, why Macquarie forecasts this ASX 200 mining stock could rocket another 33%

Macquarie forecasts more outsized gains to come for this surging ASX 200 mining stock.

Read more »

Three mining workers stand proudly in front of a mine smiling because the BHP share price is rising
Resources Shares

Forget gold! This metal just hit record highs and ASX 200 miner BHP is betting big

Let’s find out why.

Read more »

Three miners looking at a tablet.
Broker Notes

Does Macquarie prefer Rio Tinto, Fortescue or BHP shares heading into 2026?

BHP, Rio Tinto, or Fortescue? Macquarie only expects one of the three ASX mining stocks to outperform.

Read more »

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

3 reasons why the Mineral Resources share price is primed to rebound

Can the troubled miner get out of its hole?

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

4 reasons to buy this surging ASX All Ords mining stock today

A leading wealth manager expects more outperformance from this surging ASX All Ords miner.

Read more »