Why BHP shares made our headlines this week

An old-fashioned news boy stands on a stool and yells through a microphone in an open field.An old-fashioned news boy stands on a stool and yells through a microphone in an open field.

BHP Group Ltd (ASX: BHP) shares have recouped their morning losses and are up 0.2% at the time of writing.

The S&P/ASX 200 Index (ASX: XJO) iron ore miner is currently trading for $44.32 per share. That’s up 1.9% from last Friday’s closing price.

That’s the latest price action for you.

Now, here’s why BHP shares made our headlines this week.

What’s been happening with BHP shares?

The ASX 200 iron ore giant popped into The Motley Fool headlines on Monday after Ben Cleary, portfolio manager for the Tribeca Global Natural Resources Fund, said BHP shares could trade for $100 apiece over the longer term. That’s 126% higher than the current price.

Cleary said that supply constraints for industrial metals were looming, despite fears of a global recession and some slower-than-expected short-term demand from China.

He noted that there’s been a “decade of underinvestment in new projects, while demand is continuing to build amid the transition to a decarbonised world”.

And he pointed to ongoing strong credit growth in China as likely to fuel demand for iron ore.

“We just think it’s a great time to be adding exposure to the sector, and we have been, despite the uncertain environment we’re in,” Cleary said.

Indeed, on Thursday BHP shares were back in our headlines as the miner outpaced the ASX 200, closing the day up 1.2%.

That came on the back of a 2.8% overnight increase in the price of iron ore, to US$110 a tonne.

Why did the price of the steel-making metal lift-off?

Well, mostly thanks to China, where new home prices increased 0.3% across 70 cities in April.

“The market is hoping this is a harbinger to a pick-up in steel output,” ANZ economist John Bromhead said.

“Optimism was further fuelled after China’s NDRC pledge to keep boosting loans to the manufacturing sector,” he added.

Let’s not forget the juicy BHP dividends

BHP shares also made our headlines this week thanks to the miner’s fully franked dividends.

The ASX 200 miner currently trades on an 8.8% trailing yield.

And Goldman Sachs believes BHP shares will continue to deliver above-average dividend yields over the next two years.

The broker is forecasting the miner will pay dividends of $3.08 in FY23 and $2.45 in FY24.

At the current share price, that comes out to a yield of 7% in FY23 and 5.5% in FY24.

Goldman also has a $49.90 12-month price target on BHP shares. That’s 12.6% above the current price.

The post Why BHP shares made our headlines this week appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

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