BHP shares have surged 29% over the past six months, powered by record iron ore production that exceeded guidance of 285 million tonnes and generated operating cash flow of more than $20 billion in the latest half-year. Strong pricing in the seaborne iron ore market averaged above $120 per tonne during this period, fueling a return on capital employed of over 20%. Management has deployed this excess cash to maintain industry-leading free cash flow margins above 40%, while preserving balance sheet flexibility.

With iron ore markets facing pressure from rising supply in Brazil, BHP’s growing exposure to copper—where prices have traded near decade highs—and its strategic Jansen potash project in Canada provide a second engine of growth. The company has delayed Stage 1 expansion of Jansen to optimize capital allocation, with first EBITDA contributions now expected in late 2028. Meanwhile, copper output climbed by 12% year over year to 1.7 million tonnes, helping offset near-term iron ore headwinds.

BHP’s commitment to disciplined capital management is evident in its recent $2 billion sale of non-core Pilbara iron ore assets and a revised net debt target that allows for selective investment in future-facing metals. The company maintains a dividend yield near 8%, supported by a payout ratio capped at 50% of underlying earnings. Despite a prevailing nickel price of $18,500 per tonne, BHP has kept nickel expansions on hold until February 2027, reflecting its focus on projects that meet strict return thresholds.