Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

3 Things to Love About BHP Billiton plc (ADR) (BBL)

LONDON — There are things to love and loathe about most companies. Today, I’ll tell you three things to love about the world’s biggest miner, BHP Billiton plc (ADR) (NYSE:BBL). I’ll also be asking whether these positive factors make BHP Billiton a good investment today.

Size and spread
BHP Billiton plc (ADR) (NYSE:BBL) is not only the world’s biggest mining company, but it’s also the most diversified. Over the past three years, in broad terms, group revenue breaks down more or less equally three ways: iron ore, other metals, and petroleum and coal. Geographically, China is the largest market, supplying close to 30% of group revenue, but the remaining 70% comes from far and wide.

No miner can insulate itself from commodity prices, and BHP is no exception. However, with its early , mid-, and late-stage cycle metals; its diversification into oil and gas; and its wide geographic markets, the group is more resilient than its peers.

There have been fireworks in the boardrooms of BHP’s Footsie rivals of late: Cynthia Carroll, boss of Anglo American, departed under shareholder pressure with no successor in place; Tom Albanese left Rio Tinto plc (ADR) (NYSE:RIO) with equal abruptness under the cloud of a $14 billion asset writedown; and Xstrata chief Mick Davis is ceding control to Ivan Glasenberg of merger partner Glencore.

In contrast, BHP’s announcement of the retirement of Marius Kloppers and the naming of Andrew Mackenzie as his successor was made amid little fuss. Was there just a teensy bit of salt-rubbing into rivals’ wounds as BHP referred to a “planned and considered” succession process that “has served the company well for over a decade”?

Kloppers’ tenure at BHP wasn’t faultless, but having taken up the job in October 2007, he did relatively well through a tough period. The company’s shares increased 18% on his watch, compared with hefty falls for Rio Tinto (23%), Anglo American (44%), and Xstrata (66%).

BHP’s new chief executive had been appointed by Kloppers in 2008 to lead the group’s nonferrous-metals business — the division from which Kloppers himself had graduated. While Mackenzie brings continuity, he has also promised productivity, capital discipline, and more emphasis on returning cash to shareholders. That’s good news for investors, because BHP’s dividend record is already decent compared with those of its peers.

Since 2008 the dividend has grown from $0.70 to $1.12. As things stand, at a share price of 2,054 pence, BHP offers a 12-month forward yield of 3.8% — the highest income of all the Footsie’s big miners and above the average of the wider market, too.

A good investment?
I’ve just mentioned how attractive BHP’s yield is, particularly given the new CEO’s words on returning cash to shareholders. The price-to-earnings ratio and earnings growth also appear attractive once you look past the company’s current year-end of June 30. The P/E for the year ending June 2014 is forecast to be about 10, with analysts having penciled in earnings growth of some 30%.

The article 3 Things to Love About BHP Billiton originally appeared on

GAChester has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.