Blue Chip ASX Stock, Down Currently But Well Positioned to Create Value

Team Veye | 13-Nov-2024

BHP one of the ASX best long term dividend stocks is having a portfolio of world class assets in attractive commodities. Besides being among high growth stocks it is also considered to be one of the high quality dividend stocks. 

BHP Group Limited (ASX: BHP)

BHP Group Limited (ASX: BHP) has announced the ratification of a major agreement regarding the Samarco dam failure in Brazil. The deal was concluded by the Supreme Court of Brazil on November 6, 2024. This included a resolution of all claims advanced by public authorities in Brazil concerning the Fundão dam disaster in 2015. The settlement, valued at R$170 billion (US$31.7 billion), is designed to provide compensation and support for the communities, people, and environment affected by the disaster. BHP and its partners, Vale and Samarco, are committed to funding major remediation efforts in the region and will continue long-term recovery through the Renova Foundation. 

Despite global economic challenges, BHP remains confident in its ability to deliver shareholder value. The company faces geopolitical tensions, protectionism, and commodity price volatility, but continues to focus on maintaining a portfolio of high-quality, resilient assets. In key commodities for the future, BHP has strategically positioned: copper; plays a critical role in renewable energy and electric vehicles; potash - of course important to food security; and steelmaking materials. The company remains the lowest-cost producer of iron ore, and it continues searching for opportunities to enhance operational efficiencies. 

BHP's FY24 financial performance was outstanding, with underlying EBITDA at US$29 billion. This marks the eighth consecutive year the company has posted margins above 50% and generated over US$20 billion in operating cash flow annually. In line with its Capital Allocation Framework, BHP prioritized shareholder returns, declaring US$7.4 billion in dividends for FY24. Over five years, such a strategy in the company has helped to achieve a total shareholder return of about 15% annually clearly showing performance in generating steady value across cyclical market fluctuations. 

BHP had a strong start to FY25, with increased production across all major commodities. Copper production rose 4%, driven by better feed grades and recoveries at the Escondida mine. Iron ore production from Western Australia was up 3%, thanks to the successful completion of debottlenecking projects. The company also saw a 20% increase in its steelmaking coal production, excluding the divested Blackwater and Daunia mines. BHP continues to focus on growth opportunities, including a joint venture with Lundin Mining to advance a significant copper discovery in Argentina and its potash project in Canada, which is 58% complete with production scheduled to begin in two years. Copper outlook is strong as it is expected to increase demand by 70% by 2050, driven by economic expansion, electrification, and the energy transition. 

Source: Company’s Report

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