BHP vs BP Which Is a Smarter Choice?

BHP Group and BP are two of the largest energy companies in the world, both publicly traded on major stock exchanges. BHP is a global resources company, primarily focused on mining and petroleum, while BP is a leading integrated oil and gas company. Investors looking to diversify their portfolios with energy stocks may consider these two giants. Each company has its strengths and weaknesses, making them attractive options for different types of investors.

BHP or BP?

When comparing BHP and BP, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between BHP and BP.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. BHP has a dividend yield of 5.65%, while BP has a dividend yield of 6.08%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. BHP reports a 5-year dividend growth of 7.38% year and a payout ratio of 97.14%. On the other hand, BP reports a 5-year dividend growth of -7.33% year and a payout ratio of 182.37%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with BHP P/E ratio at 16.64 and BP's P/E ratio at 30.08. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. BHP P/B ratio is 2.92 while BP's P/B ratio is 1.26.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, BHP has seen a 5-year revenue growth of 0.31%, while BP's is -0.19%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with BHP's ROE at 18.25% and BP's ROE at 3.99%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $51.45 for BHP and $29.70 for BP. Over the past year, BHP's prices ranged from $50.90 to $69.11, with a yearly change of 35.78%. BP's prices fluctuated between $27.82 and $40.40, with a yearly change of 45.22%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.