BHP (BHP) £22.71
Gain to date: 14.5%
Original entry point: Buy at £19.83, 23 December 2020

As expected mining giant BHP (BHP) has felt the benefit of soaring iron ore prices and has decided to reward shareholders with a record $5.1 billion, or $1.01 per share, first half dividend - a 55% year-on-year hike.

BHP makes half its money from iron ore currently, and the world’s largest miner has been a big beneficiary of an upswing in prices, which have risen 85% in the past year and peaked at $185 per tonne in December, mainly due to demand from China, the world’s biggest iron ore consumer.

To put the impact into context, miners, including rivals like Anglo American (AAL) and Rio Tinto (RIO), can dig iron ore out of the ground profitably at prices around $15 per tonne.

In its half-year results to 31 December, BHP reported a 16% jump in underlying attributable profit - the measure used by analysts and investors - to just over $6 billion on revenue of $25.7 billion. Net debt, also closely watched, dropped 7% to $11.8 billion.

If iron ore and copper prices - another key commodity for BHP - remain at current levels in the first half of the year analysts think it can cut net debt significantly, which could pave the way for another big shareholder payout.

SHARES SAYS: There’s increasing talk we’re in for a commodities super-cycle this decade. BHP would be a big beneficiary.