Why BHP Group Shares Remain on Investors' Radar Despite Recent Decline

Since the start of 2024, the BHP Group Ltd (ASX:BHP) share price has experienced a 21.7% decline. Despite this, investors may still find reasons to keep BHP shares in focusLet’s explore why BHP remains an attractive option for long-term portfolios.

BHP Share Price in Focus

BHP Group, formerly known as BHP Billiton, is a diversified natural resources company with a history dating back to 1885The company is a major producer of commodities essential for energy production and manufacturing, and it has recently expanded into the fertiliser market, solidifying its position as a leading ASX mining stock.

BHP’s business operations are divided into three key areas:

1. Copper and related minerals – This includes gold, uranium, silver, and zinc.
2. Iron ore – A critical resource for global construction and infrastructure.
3. Coal – Both metallurgical and energy coal are part of BHP's operations.

BHP shares are often seen as a cornerstone for dividend-focused portfolios and are commonly found in various ASX-listed exchange-traded funds (ETFs) and listed investment companies (LICs)Many Australian investors may already have indirect exposure to BHP shares through superannuation or other managed funds.

The Case for Resources Shares

The S&P/ASX 200 Materials Index (ASX:XMJ), which tracks materials and resources companies, has delivered an average capital growth of 3.70% per year over the past five yearsThis performance is in line with the broader ASX sectors, which have averaged 3.75% over the same periodLet’s dive into some of the reasons why resources companies like BHP continue to attract attention.

Strong Dividend History

A key factor for investors in the resource sector is the reliable dividends offered by companies like BHPOver the last five years, BHP has provided an average dividend yield of 5.36%, reinforcing its reputation as a consistent dividend payerCurrently, BHP’s dividend yield stands at around 5.53%, slightly above its five-year average, which can be a positive sign for income-focused investors.

While the dividends are appealing, it’s important to note that commodity prices drive these businesses, leading to fluctuations in both share prices and dividend payments.

Growth Potential in the Resource Sector

The demand for essential resources such as iron ore, copper, and coal remains strong, particularly as the global economy transitions towards renewable energyMetals like copper and lithium are critical for electric vehicle batteries, solar panels, and other renewable technologiesAs a result, companies like BHP and Rio Tinto are investing heavily in positioning themselves at the forefront of this demand surge.

This ongoing need for raw materials means that despite short-term challenges, BHP is well-placed to benefit from long-term global trends in energy transition and infrastructure development.

BHP Share Price Valuation

One method to quickly assess BHP’s share price is by reviewing its dividend yield over timeThe dividend yield reflects the cash flow received by shareholders and can vary depending on company performance and market conditionsWith the current dividend yield sitting at 5.53%, slightly higher than its historical five-year average of 5.36%, BHP shares could present an attractive income opportunity relative to past performance.

Final Thoughts

Despite a recent decline in its share price, BHP Group continues to offer strong dividend yields and long-term growth potentialThe company’s focus on essential commodities like copper and iron ore, combined with its investment in renewable energy resources, ensures that BHP remains a key player in the global economyInvestors interested in resource shares may continue to monitor BHP as it navigates both short-term challenges and future opportunities.