Our report for BHP Group (formerly BHP Billiton) is updated and rated Speculative Buy for the BBL ADR (American Depository Receipt) that trades in New York at $42.49. It also trades as the BHP ADR at $49.22. The two types of shares are said to be economically equivalent and yet a big discount has applied to BBL for some years. We would favor the BBL. Adding to the confusion these ADRs each represent two actual shares.
BHP is a massive mining company headquartered in Australia but with operations around the world. Its main product is iron ore but it also has large operations mining copper and coal ans also has off-shore petroleum wells. In Canada it is is developing the Jansen Lake Potash mine which is not yet operational.
Its earnings are inherently volatile and hard to predict. But it does have a strong balance sheet. It also pays a high dividend currently with a trailing yield of 6.3% on the BBL shares. But they vary the dividend up and down somewhat with earnings. For that reason and because it is not eligible for the Canadian dividend tax credit, it should not be bought primarily for the dividend. The stock price is almost exactly unchanged since our update one year ago but it did pay regular dividends amounting to 6.3% of the BBL price and a further 4.8% as a special dividend. As reported in comments earlier this year, I sold out my position in this company at a gain earlier this year.
This stock is probably best suited to those who particularly seek an exposure to a large mining company. For further comments see our comment of October 16 last year. The stock is reasonably priced at this time but it appears to be facing lower earnings this fiscal year which could certainly send the price lower.