Why the BHP (ASX:BHP) share price just hit a new all-time high this Friday

BHP shares have just hot a new record high…

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The S&P/ASX 200 Index (ASX: XJO) is having a pretty ho-hum kind of day this Friday. The ASX 200 is currently down, but only just, falling 0.049% to 7,414 points at the time of writing. But one of its major constituents – the BHP Group Ltd (ASX: BHP) share price – is doing a bit better today.

BHP shares have just hit a new all-time high. The ‘Big Australian’ is currently up a healthy 1.65% to $54.21 a share, after hitting $54.55 earlier today. That’s a new record high for the miner. But it’s not the first time BHP has climbed to new heights in recent times.

BHP shares have spent 2021 so far on fire. This ASX 200 blue chip is now up 26% year to date in 2021 so far, and a very impressive 43.5% over the past 12 months. It’s also up 171% over the past 5 years. These numbers don’t reflect BHP’s substantial dividend payments either.

So what is pushing BHP up once again this Friday?

Why the BHP share price is hitting new record highs today

Well, there’s no major news or announcements out of the miner today, so we can rule that out straight away. However, several factors have been ‘coming up Milhouse’ for BHP in recent months.

The first is the stubbornly high iron ore price. Iron ore is currently going for US$193 a tonne. That’s not quite as high as the US$200 a tonne-plus levels we have seen for most of 2021 so far. But it is still extremely elevated by historical levels, meaning that iron ore miners are still gushing cash flows.

These high iron prices are also being supplemented by the Aussie dollar, which has spent the last few months or so falling in value against the US dollar. Back in early May, one Aussie dollar was buying around 79 US cents. Today, that same dollar will only get you around 74 US cents.

Since BHP sends most of its iron ore overseas (where buyers purchase it in US dollars), this means BHP is getting more Australian dollars than it did a few months ago for every tonne it sells.

All of this adds up to investors smelling money. BHP’s rival Rio Tinto Limited (ASX: RIO) announced a record US$9.1 billion upcoming dividend on Wednesday, worth US$5.61 ($7.59) a share. There is probably a reasonable expectation that BHP will be pulling something similar out of its hat, given both companies are sitting in similar tailwinds.

It’s likely a combination of these factors that are pushing up BHP shares today to new record highs. At the current BHP share price, the company has a market capitalisation of $157.1 billion, a price-to-earnings (P/E) ratio of 29.07, and a trailing dividend yield of 3.81%.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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