June 2016 was not a great time to be investing.
China's economy was slowing.
Iron ore had crashed from above US$100 per tonne to below US$50 per tonne.
BHP Group Ltd (ASX: BHP) had just cut its dividend for the first time in 16 years, shocking income investors who had relied on the payout for years. The mood around BHP shares was deeply negative.
And yet, for investors who held their nerve and put $10,000 into BHP shares at that moment, the outcome has been extraordinary.
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The numbers
In June 2016, BHP shares were trading at approximately $16 on the ASX.
A $10,000 investment at that price would have bought approximately 625 shares.
Today, BHP shares trade at approximately $60. On capital appreciation alone, those 625 shares are now worth approximately $37,500.
That is a capital gain of approximately 275% over ten years. But for BHP shareholders, the capital gain is only half the story.
The dividend contribution
BHP is one of the most reliable dividend payers on the ASX and has historically distributed 50% to 75% of underlying attributable profit as a fully-franked dividend twice per year.
Over the past ten years, BHP has paid total dividends of approximately A$24 per share. This includes the record payouts that accompanied the commodity super cycle of 2021 and 2022.
On 625 shares, that translates to approximately $15,000 in cumulative dividends received over the decade.
Adding that to the capital value of $37,500 gives a total portfolio value of approximately $52,500.
That is more than five times the original $10,000 investment over ten years, equivalent to a total return of approximately 425%.
For context, a $10,000 term deposit earning 2% per annum over the same period would have grown to only $12,190.
The difference between those two outcomes is the difference between a comfortable retirement and a modest one.
Why the returns were so strong for BHP shares
Three distinct phases drove BHP's ten-year return.
The first was the recovery from the commodity crash of 2015 to 2016. The iron ore price rebounded from below US$40 to above US$100 per tonne and the share price more than doubled.
The second was the commodity super cycle of 2021 and 2022, when iron ore briefly exceeded US$220 per tonne and BHP paid record dividends that alone returned nearly half the original investment.
The third is the current phase, driven by copper earnings exceeding iron ore for the first time in BHP's 136-year history. This comes as the copper price surged above US$13,000 per tonne on AI data centre and electric vehicle demand.
Each phase was driven by different forces. And all three rewarded patient long-term holders.
What $10,000 invested in BHP shares today might be worth in 2036
Nobody can predict exactly what BHP shares will return over the next decade.
What we can say with confidence is that BHP plans to grow copper-equivalent production at 3% to 4% per year through 2035.
This will add to one of the world's most valuable copper portfolios when AI data centres, electric vehicles, and grid infrastructure are creating the most sustained demand surge for copper in history.
If BHP delivers even half the total return over the next decade that it delivered over the past decade, $10,000 invested today would be worth approximately $30,000 by 2036.
Foolish Takeaway
The lesson from BHP's ten-year return is that patient, long-term ownership of quality businesses through commodity crashes, dividend cuts, and market panics is one of the most reliable paths to building wealth available to Australian investors.
The investors who sold BHP shares in June 2016 when the mood was darkest missed one of the great investment returns of the decade.
