BHP Group Ltd (ASX: BHP) shares are a popular option for Aussie investors.
But are they a good one as we head into 2025?
To find out, let's see what an investment of $5,000 into the mining giant's shares could potentially become in 12 months.
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Investing $5,000 into BHP shares
At the time of writing, the Big Australian's shares are changing hands for $39.90.
This means that an investment of $5,000 (and an extra $27.40 for good measure) would lead to me picking up 126 shares.
What could those shares be worth at the end of 2025? Well, Goldman Sachs thinks they could be worth a fair bit more.
A recent note reveals that its analysts have put a buy rating and $47.40 price target on BHP's shares. If this recommendation proves accurate, it will mean those 126 units have a market value of $5,972.40.
That's a return of 18.8% or approximately $950.
But wait, there's more!
Don't forget the dividends
BHP is one of the most generous dividend payers on the Australian share market. Each year, the company shares a good portion of its profits with its lucky shareholders. This means that billions of dollars are paid out in fully franked dividends.
Goldman Sachs expects this to be the case again in FY 2025. It is forecasting a fully franked 99 US cents per share dividend. This equates to approximately $1.58 per share in Australian dollars and represents an approximate 4% dividend yield at current prices.
This means that those 126 BHP shares would pull in dividend income of $199.08. This boosts the total return to approximately $1,150 on that original investment.
Commenting on why it thinks that BHP would be a good investment for 2025, Goldman Sachs said:
BHP is currently trading at ~5.8x NTM EBITDA, below the 25-yr average EV/EBITDA of 6.5-7x, but at a premium to RIO on ~5.0x; but at ~0.8x NAV which is in-line with RIO at ~0.8x NAV. Over the last 10 years, BHP has traded at a ~0.5x premium to global mining peers. We believe this premium can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore where BHP maintains superior FCF/t vs. peers).
We remain bullish on copper due to ongoing supply side challenges and increasing demand and expect BHP's copper EBITDA to increase by ~US$3bn to ~US$10bn by FY26E (~45% of group EBITDA). Under our base case, copper EBITDA is expected to reach US$14bn by FY35E and ~US$19bn with all copper growth, at GSe long run copper of US$4.44/lb (real $, from 2028).
