Unfortunately for its many investors, the BHP Group Ltd (ASX: BHP) share price had a year to forget in 2024.
The mining giant's shares underperformed significantly over the 12 months after investors sold them down in favour of the big four banks.
What happened to the BHP share price in 2024?
Over the period, the Big Australian's shares lost 21.5% of their value.
To put that into context, a $10,000 investment at the end of 2023 would have become worth approximately $7,850 by the end of 2024.
Though, it is worth remembering that BHP is a big dividend payer and 2024 was no exception.
During the period, BHP rewarded its shareholders with dividends totalling approximately $2.20 per share.
Based on where the BHP share price ended 2023 ($50.41), this means that investors buying at that price would have received an attractive dividend yield of 4.35%.
Though, even after dividends, BHP's shares still fell short of the performance of the ASX 200 index, which rose 11%, by approximately 28%.
There were a number of drivers of this. As I mentioned at the top, investors clearly had a preference for the big four banks in 2024 and bid them up to record highs.
Weaker commodity prices, concerns over Chinese economic growth, cost inflation in the mining sector, and the failed takeover of Anglo American (LSE: AAL) also weighed on sentiment.
Will things be better in 2025?
Goldman Sachs is likely to see 2024's weakness as a buying opportunity for investors in 2025.
A recent note reveals that its analysts have a buy rating and $47.40 price target on BHP's shares. This implies potential upside of 19% for investors from current levels.
It also expects a fully franked dividend of approximately $1.58 per share in FY 2025. Based on the current BHP share price of $39.81, this equates to a dividend yield of approximately 4%.
This boosts the total potential 12-month return on offer with the miner's shares to approximately 23%.
Commenting on its buy recommendation, the broker 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).
