On a day where the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has crumbled, shares of BHP Billiton Limited (ASX: BHP) have tumbled to a fresh five-year low at just $27.72. At that price, the stock has dropped an agonising 30.2% in the space of just four months, wiping almost $40 billion from the company's market value.
The tumbling iron ore and oil prices both appear to be the major contributors to the stock's demise today – as has been the case in the months gone by. The benchmark Brent oil price dropped 2.9% to be changing hands for US$61.85 a barrel while iron ore, a major steelmaking ingredient, fell US 38 cents to US$68.99 a tonne.
Combined, the two commodities account for more than 50% of the miner's revenues, so lower prices will certainly have an impact on the company's margins and overall profits.
Should you buy?
At its current price, BHP is certainly looking appealing.
Not only has the stock not traded this low since March 2009, it's also offering a compelling 5.3% fully franked dividend yield (based on FY15 forecasts) which is tipped to grow over the coming years.
While the miner definitely deserves a position on your watchlist, investors would be wise not to pull the trigger on the "Buy" button just yet. Prices of both commodities are expected to fall even further over the coming weeks or months which will almost certainly drag the shares lower. By waiting, investors could not only be given a even cheaper entry point, but could be offered an even more compelling dividend yield too.
While you wait, there's an even better dividend stock you need to know about.
