3 reasons to buy BHP Billiton Limited today

These facts could change the way you look at Australia's largest diversified miner.

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Shares in BHP Billiton Limited (ASX: BHP) have helped drive the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) 0.4% higher today, rising 30c or 0.8% and are now trading at $37.88. Today's gain takes their total rise since the beginning of the month to 5.5% with the shares now sitting just 11c below their beginning price for the 2014 calendar year.

Although they aren't as cheap as they were just a fortnight ago, there are still plenty of reasons to like the miner's shares going forward. Here are three reasons why BHP would be a solid acquisition today…

1)  Competitive Advantage. Declining commodity prices will affect BHP's margins in the near-term, but they could also force higher-cost producers out of the market. A number of Chinese iron ore producers have already closed their operations recently with the commodity trading below US$100 a tonne.

2)  Greater Production. BHP, along with fellow iron ore miners Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are heavily ramping up production rates. This should see the miner's margins improve which will help bolster earnings going forward.

3)  Yield. The stock currently offers a solid 3.3% fully franked dividend yield. In addition to the potential capital gains that could be made, that's quite appealing considering the low interest rate environment!

3 Explosive small-cap resources stocks you NEED to know about

Based on its current valuation, BHP Billiton boasts a market capitalisation of $120.7 billion. While the miner is a strong core company worth holding for the long term, its ability to generate massive capital gains is limited due to its sheer size.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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