The BHP Group Ltd (ASX: BHP) share price climbed 1% yesterday while the S&P/ASX 200 Index (ASX: XJO) edged 0.03% higher to 5,944.50 points.
While the S&P/ASX 200 Materials (+1.68%) sector shares like BHP provided some strong gains, this was largely offset by a soft performance from the S&P/ASX 200 Info Tech (-1.76%) and S&P/ASX 200 Industrials (-2.35%) sectors.
One good day doesn’t necessarily make BHP a good investment, but is it worth another look at its current price?
Is it time to buy BHP shares?
I think BHP is an interesting company to look at buying right now. It’s currently the largest ASX share by market capitalisation and the Aussie miner is worth an incredible $167.6 billion.
The BHP share price has fallen 9.2% in 2020 but is starting to gain some momentum. BHP hit a new 52-week low of $24.05 in mid-March before nearly doubling to its current $35.36 valuation.
That means that many of the potential gains have been snapped up by brave investors in the recent bear market.
I think a lot of the potential BHP share price growth lies with fiscal policy in 2020 and 2021. If the government turns to infrastructure to fast-track an economic recovery that could be good news for BHP.
More construction means more steel, which means more demand for key inputs like iron ore. Government work is about as reliable as it gets, which means BHP shares could climb higher if we see some serious new investment.
The BHP share price is up 24% in the last 5 years, and I don’t think BHP is super cheap at $35.36 right now. However, with a company as old and large as BHP, you also have to account for dividends.
BHP is currently yielding a tidy 6% dividend, which is handy income for any retiree or even young investors looking to re-invest their gains for long-term growth.
Foolish takeaway
If you like reliable dividends then I think BHP shares could be a solid addition to a well-diversified portfolio.
The short-term outlook for iron ore prices is strong and the Aussie miner has been a blue-chip dividend share for decades.
Of course, nothing is guaranteed and it’s wise to only buy if you’re willing to hold on a long-term investment horizon.
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More reading
- These ASX stocks might be a better option than Carsales.Com
- How to try and beat the market with ASX shares
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 finishes flat, ASX travel shares drop
- Afterpay and 2 more ASX 200 shares to watch this week
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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