BHP Group Ltd (ASX: BHP) shares have been on a tear in 2026.
The mining giant surged to a 52-week high of $65.59 on Wednesday, extending its remarkable run. BHP shares are now up 44% year to date and an impressive 72% over the past 12 months.
That's great news for shareholders — myself included.
Back in late 2020, I made one of my first investments in the Australian share market, buying BHP shares during a period of enormous uncertainty. Nearly six years later, the results offer a fascinating lesson in patience, dividends, and the power of compounding.
Here's how the investment has performed.
Image source: Getty Images
A volatile but rewarding journey
At the end of 2020, I invested $24,987 to purchase 682 BHP shares at $36.63 each.
It didn't take long for volatility to arrive.
The world was still grappling with the pandemic, commodity markets were swinging wildly, and BHP shares briefly traded back into the low $30s as investors worried about global growth.
Then came one of the strongest commodity booms in recent history. Iron ore prices soared, profits surged, and BHP shares powered beyond $50 during the 2021 and 2022 mining rally.
The cycle eventually turned. China's property downturn weighed on sentiment, iron ore prices retreated, and the share price drifted back towards the high $30s before finding its footing.
Today, BHP shares sit at $65.59, well above my original purchase price.
Capital growth and dividends
Based on Wednesday's closing price, my original 682-share holding is now worth approximately $44,732.
That alone represents a capital gain of around $19,745.
But BHP's appeal has never been limited to share price appreciation.
Over the past five and a half years, the miner has distributed enormous dividends, particularly during the peak profit years when commodity prices were booming.
Assuming total dividends of roughly $24 per share over the period, those 682 BHP shares would have generated around $16,368 in cash income.
Add that to the capital gain and the total value created exceeds $60,000 — more than double the original investment.
The power of reinvestment
The story becomes even more interesting when dividends are reinvested.
Assuming participation in BHP's dividend reinvestment plan (DRP) and an average share price of $51 over the period, those dividend payments could have steadily increased the holding from 682 shares to approximately 806 shares.
That's where compounding starts to shine.
At today's share price of $65.59, the 806 BHP shares would be worth roughly $52,866.
Importantly, those extra shares also generate larger future dividend payments, creating a snowball effect over time.
Foolish Takeaway
The past five and a half years have highlighted both sides of investing in BHP shares.
The stock is undeniably cyclical, with returns heavily influenced by commodity markets and global economic conditions.
But it has also demonstrated the wealth-building power of combining capital growth with substantial dividend income.
Whether those dividends were spent or reinvested, patient shareholders who stayed the course through the ups and downs have been richly rewarded.
