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Why buy and hold BHP shares for 10 years

2 min read Opinion An argument, written to persuade. Rewritten in plain language

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  • BHP Group Ltd (ASX: BHP) is already one of the largest companies on the Australian share market.
  • The company owns large, long-life assets across several commodities, which means management can direct capital towards the opportunities offering the strongest prospective returns.
  • Mining projects can take years to develop, cost billions of dollars, and operate for decades once they are running.
  • BHP does not need every commodity to be booming at the same time.
  • BHP is the type of share makes more sense when viewed over years than months.

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BHP Group Ltd is already one of the largest companies on the Australian share market.

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Headline as published: Why I'd buy and hold BHP shares for 10 years

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BHP Group Ltd (ASX: BHP) is already one of the largest companies on the Australian share market.

That size can sometimes make it easy to assume the biggest growth period is already behind it.

And if I were looking for an ASX mining share to buy today and leave alone for the next decade, BHP would be high on my list.

One of the things I like most about BHP is the flexibility that comes with its scale.

The company owns large, long-life assets across several commodities, which means management can direct capital towards the opportunities offering the strongest prospective returns.

That becomes valuable in resources.

Mining projects can take years to develop, cost billions of dollars, and operate for decades once they are running. Companies with strong balance sheets and existing infrastructure have an advantage when attractive opportunities appear.

BHP does not need every commodity to be booming at the same time.

It can continue investing through weaker periods, expand existing operations where the economics make sense, and take a patient approach to new projects.

Over a 10-year holding period, that flexibility could be more valuable than trying to predict which commodity will perform best next year.

The global economy will probably look different a decade from now, but it will still need large quantities of physical materials.

Cities will keep expanding. Electricity networks need upgrading. Data centres, renewable energy projects, electric vehicles, construction, and manufacturing all require resources somewhere along the supply chain.

BHP's exposure to commodities, including copper and iron ore, puts it in a strong position to participate in that spending.

I am interested in how its copper portfolio could develop.

BHP already operates copper assets, giving it a platform to expand as demand increases. New supply is also difficult to bring online quickly, which could make high-quality existing operations valuable over time.

The point for me is that BHP already owns the assets and expertise needed to participate rather than having to build a new business from scratch.

A decade is a long time to wait for an investment thesis to play out, so I also like that BHP can return amounts of cash to shareholders.

Its dividend will move with commodity prices and profits, so to never treat the payment as fixed.

But when conditions are strong, BHP's large operations can generate free cash flow.

That gives management the ability to balance reinvestment in future projects with dividends to shareholders.

For a long-term investor, receiving income while the company's asset base continues to develop is a valuable combination.

BHP will not deliver smooth results every year.

Commodity prices can fall, projects can run over budget, and changes in global economic activity can quickly affect demand.

There are also political, regulatory, and operational risks across the countries where BHP operates.

Those uncertainties are why think about the investment in decades rather than quarters.

I am backing the quality of the assets, the company's financial strength, and management's ability to allocate capital through multiple commodity cycles.

BHP is the type of share makes more sense when viewed over years than months.

There will be weaker periods for commodity prices along the way, but the company has the assets, financial strength, and investment opportunities to keep moving forward through those cycles.

For me, that is enough to make BHP a share I would be comfortable buying and holding for the next decade.

You are reading our version, not theirs. This is The Motley Fool Australia's report with its verdicts and loaded words taken out. Plain description stays, and so do adjectives that carry a fact, such as "former" or "federal". The reporting, the facts and the quotations are theirs — quotations are never edited — and the indicators beside it measure this version. Hover or tap Adjectives to see every one left in the text.

How outlets headlined it

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  • The Motley Fool Australia Buy, hold, sell: AGL Energy, Telstra, Zip shares plain
  • The Motley Fool Australia Buy, hold, sell: Aurizon, Car Group, Guzman y Gomez shares plain
  • The Motley Fool Australia Buy, hold, sell: Temple & Webster, Kelsian, Boss Energy shares plain
  • The Motley Fool Australia Buy, hold, sell: James Hardie, REA Group, and Ramelius shares plain
  • The Motley Fool Australia Why I'd buy and hold BHP shares for 10 years 1 change

How each outlet filed it

Outlet Niral ScoreAdjectivesSourcingPoliticalSentimentHappiness
The Motley Fool Australiaas they published this story 25.3 27 0 0 0.5 52.7
The Motley Fool Australia 16.2 18 17 0 0.2 54.4
The Motley Fool Australia 15.4 18 4 0 -0.0 50.6
The Motley Fool Australia 16.9 14 0 0.1 0.4 51.3
The Motley Fool Australia 12.7 11 18 0 0.1 56.6
Mundane Readneutralized from The Motley Fool Australia 11.4 10 18 0 0.1 56.6

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