BHP Group Ltd (ASX: BHP) shares sped to a 52-week high of $58.41 on Friday.
In the first two months of this year the mining giant has gained 24% in value, which brings the total 12-month gains for BHP shares to 46%. That's great news for BHP shareholders — myself among them.
Five years ago, I dipped my toes into the Australian market with one of my very first buys: BHP shares. So, how has this ASX blue chip rewarded my early conviction?
Let's run the numbers and find out.
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Volatile, rewarding stretch
At the end of 2020, I backed the $297 billion ASX mining giant at $36.63 per share. I tipped $24,987 into the market to snap up 682 BHP shares. What followed was one of the most volatile — and rewarding — five-year stretches the miner has seen in decades.
The early days of the investment coincided with global pandemic uncertainty. Commodity prices wobbled, and BHP's share price dipped into the low $30s as markets panicked.
But what came next was a surge few predicted in scale. Iron ore prices exploded, profits ballooned, and BHP shares climbed beyond $50 during the 2021–2022 commodity boom.
The cycle then cooled as China's property slowdown weighed on sentiment, sending the stock back toward the high $30s before stabilising and climbing again.
Income and capital growth story
Today, with BHP shares at $58.41, those original 682 shares are worth $39,836. That's a capital gain of roughly $14,849, a solid outcome on price appreciation alone.
But BHP is as much an income story as it is a capital growth story.
Over the past five years, the miner delivered enormous dividends, particularly during the peak profit years. If those dividends had simply been taken as cash, the investor would likely have collected around $19 per share across the period. On 682 shares, that's roughly $12,958 in dividend income.
Capital gains plus dividends taken in cash have lifted the total value of my BHP shares to roughly $53,000, more than doubling the initial investment.
Stacking shares
However, this scenario includes participation in the BHP shares dividend reinvestment plan (DRP). Assuming an average share price of $51 across the five years, reinvesting those dividends steadily compounded the holding from 682 shares to 789 shares.
That difference matters.
At today's $58.41 share price, 789 shares are worth $46,085. Compared to the original $24,987 outlay, that represents a gain of more than $21,000. And importantly, a larger ongoing income stream thanks to owning more shares.
The DRP strategy effectively turned volatile price swings into an advantage. When shares dipped back toward the $30s and $40s, reinvested dividends bought more stock. When the cycle recovered, those additional shares amplified gains.
Powerful total return
The past five years highlight two truths about BHP shares. First, they are cyclical and investors must tolerate sharp highs and lows tied to global commodity demand. Second, when the profit cycle turns in its favour, the dividend firehose can materially accelerate wealth creation.
Whether taken as cash or reinvested, the combination of capital growth and substantial dividends has delivered a powerful total return. For patient investors who rode out the turbulence, the results speak for themselves.
