BHP shows how mining stocks can work well in income portfolios‚ despite what many think. The company gives a nice 5.3% yield (way more than FTSE 100s 3.7%) even after cutting its dividend by 14% this year
The companys dividend setup is pretty straight-forward: it pays out half of its profits to stock owners. Last year it gave 54% of profits which means theres still room to move around — but future payouts depend more on how well the business does overall
Copper and iron ore make up most of BHPʼs money (about 84% of revenue): these metals are super-important for green tech and electric cars. With copper getting harder to find; prices should go up long-term. The company is also getting into potash production (which will start in about 2 years) — this is smart because the worlds population will need more food and fertilizer
- Interest rates should drop about 2% in USA over next 2 years
- Population expected to hit 9.6 billion by 2050
- Company has very low debt with just 19% net gearing
BHP looks good money-wise — its price-to-earnings is 10.3 (which means its pretty cheap right now) The company can handle some bumps: its got solid cash flow and a strong balance sheet; which helps when dealing with stuff like the upcoming US election risks and trade problems. Even though mining stocks can be up-and-down; BHPs mix of good yield and growth chances makes it worth looking at for income investors