Current BHP share price is 'reasonably attractive': WAM

The BHP Group Ltd (ASX: BHP) share price closed up 1.1% yesterday.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant finished Thursday trading for $44.26 apiece.

Alongside its rival ASX 200 iron ore miners, the BHP share price enjoyed some tailwinds from a surprisingly resilient iron ore price.

Many analysts, including Goldman Sachs, have been forecasting the industrial metal to sink below US$100 per tonne in the second half of 2023.

But the iron ore price has gone the other way, topping US$120 per tonne yesterday to notch a fresh six-month high.

Now, here's why Wilson Asset Management recently increased its weighting of BHP shares in its Wam Leaders Ltd (ASX: WLE) investment portfolio.

What is WAM saying about the ASX 200 miner?

In its August review, WAM analysts noted that BHP "has a number of growth options, including the Jansen potash project and Western Australia Iron Ore (WAIO) production".

The fund manager noted that the BHP share price dipped in August (down 2.5%) after the miner "provided higher than expected FY2024 costs and capital expenditure guidance".

This led to some modest downward earnings revisions, which saw some ASX 200 investors hitting the sell button.

But that didn't put off WAM's analysts.

In the company's monthly funds review, they noted:

We strategically increased our weighting reflecting our confidence in the company's long-term prospects supported by strong operational performance and the ability to rebound strongly in response to an improvement in market conditions.

Part of WAM's optimism stems from the resilient iron ore price amid hopes that China will meaningfully increase its stimulus measures to help spur its sluggish property markets back up to speed.

"Over the past week, we saw signs of more accommodative police measures out of China, which we anticipate will see the share price begin to reflect higher iron ore prices," WAM said.

As for the current BHP share price, the analysts noted, "We believe the current valuation is reasonably attractive, and its main commodity exposures iron ore and copper prices, which have held up well, also provide downside protections to the share price."

Atop the potential for further capital gains, BHP shares trade on a fully franked trailing dividend yield of 5.9%.

BHP share price snapshot

The BHP share price is up 15% over the past 12 months, not including those dividend payouts.