BHP vs South32 Which Is More Promising?

BHP and South32 are two prominent mining companies operating in the resources sector. Both are well-known for their global presence and diversified portfolio of assets. BHP, a larger and more established company, offers stability and strong financial performance. On the other hand, South32, a spin-off of BHP, focuses on a smaller number of commodities and provides investors with a more focused exposure to specific markets. Both stocks have their strengths and weaknesses, making them intriguing options for investors seeking to diversify their portfolios in the resources sector.

BHP or South32?

When comparing BHP and South32, 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 South32.

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 5.57%, while South32 has a dividend yield of 1.61%. 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, South32 reports a 5-year dividend growth of -9.71% year and a payout ratio of -80.39%.

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 16.90 and South32's P/E ratio at -48.02. 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 2.97 while South32's P/B ratio is 1.08.

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 South32's is 0.08%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with BHP's ROE at 18.25% and South32's ROE at -2.22%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $52.41 for BHP and $10.74 for South32. Over the past year, BHP's prices ranged from $50.90 to $69.11, with a yearly change of 35.78%. South32's prices fluctuated between $9.00 and $13.34, with a yearly change of 48.22%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.