4 compelling reasons to buy BHP Billiton Limited shares today

Deutsche Bank has provided a rather optimistic outlook for Australia’s largest diversified miner, BHP Billiton Limited (ASX: BHP). Citing a solid performance at its Blackhawk operation, the financial services group gave the stock a “Buy” rating as well as a 12-month price target of $43.60. From its current share price of $38.26, that represents a 14% upside for investors who buy today.

Here are three other reasons why you should consider adding BHP Billiton to your portfolio today.

1)  Yield. Interest rates remain low, but BHP’s shareholder returns look to only be increasing. It is trading on an estimated fully franked 3.4% yield (or 4.8% grossed up), while the miner is also tipped to initiate a share buyback program when it reports on Tuesday 19 August.

2)  Commodity prices. Believe it or not, falling commodity prices could actually be good news for BHP Billiton in the near term. While higher-cost producers are being forced out of the market, low-cost producers like BHP are gaining market dominance.

3)  Production. As a result of improving productivity, the miner smashed production records across four commodities for the year. This should bode well for the miner’s earnings announcement next week while it will also help reduce overall costs in the long term.

A better buy than BHP Billiton Limited

In my opinion, BHP presents as one of the more compelling miners thanks to its high level of safety and strong yield. However, there is a stock I am even more bullish on right no.

A stock I already own is also one the Motley Fool's top analysts have tapped as their number one stock pick for 2014 and beyond. This small-cap growth stock flies under the radar, yet is rapidly growing, and has a long runway ahead. The fully franked dividend is the icing on the cake. Click here now to claim your FREE copy of "The Motley Fool's Top Stock for 2014." I own the stock, and think you should too.

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

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