The BHP (ASX:BHP) share price has just hit a multi-year high

Here’s why the BHP Group Ltd (ASX:BHP) share price hit a multi-year high on Monday…
The post The BHP (ASX:BHP) share price has just hit a multi-year high appeared first on The Motley Fool Australia. –

boost in mining asx share price represented by happy miner making fists with hands

The BHP Group Ltd (ASX: BHP) share price was on form again on Monday.

At one stage, the mining giant’s shares charged as much as 3% higher to a new multi-year high of $42.78.  

When the BHP share price reached that level, it was up a sizeable 19% since this time last month.

Why is the BHP share price at a multi-year high?

Investors have been buying BHP’s shares over the last few weeks thanks to a rise in commodity prices.

This appears to have positioned the Big Australian to deliver another bumper profit result in FY 2021.

What has been happening?

The first commodity of note is oil. Last week oil prices climbed higher again, which led to WTI and Brent prices recording their fifth consecutive week of gains. This bodes well for its petroleum operations.

Also rising was copper. The base metal extended its year to date gain to over 24% last week, taking the price of the industrial metal to a seven-year high.

But the commodity that is getting investors the most excited is iron ore. Given how much the steel-making ingredient contributes to BHP’s overall earnings, favourable iron ore prices are always good news for the mining giant.

According to CommSec, on Friday the spot iron ore price jumped a further 5.4% to US$145.30 a tonne. This was driven by news that Vale has downgraded its production guidance, leading to concerns that supply could be constrained at a time when demand is robust.

As a comparison, BHP has provided cost guidance of US$13 to US$14 a tonne for its iron ore operations. This means it will be generating significant free cash flow right now, which could lead to generous dividend payments next year.

Is the BHP share price in the buy zone?

It was largely because of this that this morning Macquarie retained its outperform rating and lifted its price target on BHP’s shares to $46.00.

The broker has pencilled in a ~$2.78 per share fully franked dividend in FY 2021. Based on the current BHP share price, this equates to a 6.5% dividend yield.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Bruce Jackson.

The post The BHP (ASX:BHP) share price has just hit a multi-year high appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!