At the end of last month, I wrote about the performance of BHP Group Ltd (ASX: BHP) shares and how they were looking attractive at new 52-week lows.
Well, the BHP price is still at 52-week lows this week. Yes, the mining giant is up a healthy 1.35% so far this Friday at $39.74. But just yesterday, we saw BHP hit yet another 52-week low of $38.76.
Last month, I wrote that "today's pricing is a decent entry point for long-term investors looking for a diversified, world-class resources stock to add to their portfolio".
I've since changed my mind. I don't doubt that BHP is a high-quality company and provides good exposure to copper, iron ore, and other important commodities.
But I'm not quite as convinced that it would make a decent investment today.
Why? Well, it's this company's past performance.
Of course, past performance is no guarantee of future success. But it does demonstrate that winners tend to keep on winning.
BHP has not kept on winning.
The (not so) interesting history of BHP shares
Yes, the miner is down more than 25% from its all-time high of over $50 a share in 2021. But when you zoom out on its share price even further, it still doesn't look like good value to me.
To put a fine point on it, BHP shares are today trading at the same pricing they were back in April 2019. But also at the same levels we saw in July 2011. Before that, you could buy BHP shares for around the $39-40 mark way back in September of 2007.
If you don't believe what you're hearing, take a look for yourself below:
This effectively means that the only returns that many investors would have enjoyed from BHP have come from dividends.
Sure, if you bought BHP at cyclical lows and sold at cyclical highs, you might have made a lot of money. But that is a risky game, and it is not one that I try to tap into.
To be fair, BHP's dividends have not been insubstantial. Here's a table of the dividends per share, as well as the yields at the current share price of $39.74, that BHP investors would have collected over the past ten years:
| Calendar year | Annual dividends per share |
Yield at current BHP share price |
| 2014 | $1.309 | 3.29% |
| 2015 | $1.686 | 4.24% |
| 2016 | $0.399 | 1.00% |
| 2017 | $1.061 | 2.67% |
| 2018 | $1.591 | 4.00% |
| 2019 | $3.331 | 8.38% |
| 2020 | $1.749 | 4.40% |
| 2021 | $4.027 | 10.13% |
| 2022 | $4.632 | 11.66% |
| 2023 |
$2.614 | 6.58% |
Bear in mind that these yields are at the current BHP share price. If we used the ~$50 share price we had at the start of 2024, those yields would be much lower.
Foolish takeaway
So, what can we glean from this? Well, BHP has delivered some decent returns for investors, but only in certain years. In others, the returns have been very mediocre for long-term investors. This is not surprising, given BHP's cyclical nature as a commodity stock. But it gives me the belief that BHP is not a long-term market beater.
I think buying a simple index fund like the Vanguard Australian Shares Index ETF (ASX: VAS) is more likely to give investors a better return over any long period of time than buying BHP shares at their current pricing. VAS units have returned an annual average of 9.23% per annum since inception in 2009 (as of 31 July). BHP has only matched or exceeded that average return in two out of the last ten years.
If I were a retiree and maximising franked dividend income was a primary goal of my investing portfolio, I would probably have a position in BHP as part of a diversified income-focused portfolio.
But as I'm not, I think there are much better options elsewhere for investors today. Start by looking for companies with share price histories that have gone 'up and to the right' over the past 17 years, not those at the same point in 2024 as they were in 2007.
