Various Aussie blue chip stocks have helped investors recognise outstanding gains in recent years. Unfortunately, that has not been the case with mining giant BHP Billiton Limited (ASX: BHP), which has instead significantly lagged behind the broader market. As commodity prices have fallen and earnings have dropped off, BHP's shares have lost almost a quarter of their value since early 2011.
However, looking forward there are reasons to suggest BHP Billiton Limited could be a good way for investors to boost their returns. Here are three of those reasons…
1) According to Morningstar's forecasts, BHP Billiton will distribute a total of 135.5 cents per share in dividends in 2015. Based on today's price, that's a fully franked yield of 3.6% or a grossed up 5.1% yield. With interest rates set to remain at their low of 2.5% for some time yet, that dividend is looking increasingly appealing.
2) BHP's recent full-year production report was highlighted by record volumes of four commodities, including 225 million tonnes of iron ore. This, combined with a heavy reduction in costs, should help offset the issue of tumbling commodity prices to help bolster earnings.
3) It is very possible that shareholders will be rewarded in the form of a special dividend or a share buyback program, which could be announced when the miner delivers its earnings report. Following Rio Tinto Limited's (ASX: RIO) impressive earnings report last week, it has been suggested BHP could buy back as much as $3 billion worth of shares.
A better bet than BHP Billiton
As Australia's largest and most diversified miner, BHP presents as the safest stock for investors wanting to gain exposure to the mining sector. However, for investors wanting significant growth and a solid, fully franked dividend yield, I have a much better option for you.
