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The BHP Group Ltd share price has experienced a notable decline of 19.4% since the beginning of 2024. In contrast, CSL Ltd is just 6% short of its 52-week high. Given these developments, it’s worth examining whether BHP and CSL shares merit a place on an investment watchlist.
BHP Group Ltd (ASX:BHP)
BHP Group Ltd, previously known as BHP Billiton, is a leading diversified natural resources company with a history dating back to 1885. The company is involved in the exploration and production of various commodities essential for energy and manufacturing, and is expanding into the fertilizer sector.
BHP operates primarily in three areas:
- Copper and Related Minerals: This includes commodities such as gold, uranium, silver, and zinc.
- Iron Ore: BHP is a major global producer of iron ore.
- Coal: The company produces both metallurgical and energy coal.
Known for its robust dividend payments, BHP is a staple in many ASX portfolios and commonly found in ETFs, LICs, and industry superannuation funds. As a blue-chip stock, BHP's performance is often assessed through metrics such as return on invested capital (ROIC) and revenue growth. In FY23, BHP achieved an impressive ROIC of 28.10%, with revenue growing at an annual compounded rate of 22.7%. A ROIC exceeding 10% is typically considered strong for a mature company, highlighting BHP's solid financial health.
CSL Ltd (ASX:CSL)
CSL Ltd is a global biotechnology leader, known for developing and delivering medicines that save lives and enhance public health. The company is structured into three main divisions:
- CSL Behring: Focuses on blood plasma products and was acquired in 2004.
- CSL Seqirus: Specializes in flu-related products and pandemic services, formed from BioCSL and the Novartis flu business acquired in 2015.
- CSL Vifor: Produces products for iron deficiency and renal care.
CSL has built a reputation over the years as a reliable and consistent dividend-paying company, often seen as a way to gain exposure to the rising healthcare sector. Many investors view CSL as a proxy for the increasing costs associated with healthcare.
Evaluating Share Price and Dividend Yield
For investors assessing BHP, one useful metric is the dividend yield. The current dividend yield for BHP Group Ltd is approximately 6.26%, slightly above its 5-year average of 6.14%. This suggests that BHP shares are trading at a higher yield compared to their historical norm, which might indicate value in the current market environment.
Both BHP Group Ltd and CSL Ltd present interesting cases in the current market landscape. BHP's significant drop in share price this year contrasts with its strong financial fundamentals, while CSL remains close to its 52-week high, reflecting investor confidence in its consistent performance. Keeping an eye on these companies could provide valuable insights into potential investment opportunities.
