BHP Billiton (BBL) is a huge Australia-headquartered global mining and petroleum exploration and extraction company. In Australia, it has six mining and three petroleum operations; in the Americas, it has six mining and two offshore petroleum operations, notes Shawn Allen, contributing editor to Internet Wealth Builder.

The Billiton part of the company was initially formed in 1860 after a tin discovery in Indonesia. The BHP part, formerly the Broken Hill Proprietary Company, was incorporated in 1885 and named after the location of its initial lead and silver deposit in Australia. BHP merged with Billiton in 2001.

2018 fiscal year revenues were 35% iron ore related, 30% copper, 13% petroleum, and 21% coal. Sales into China represented 53% of revenue in fiscal 2018 and Asia in total represented 81% of revenue.

A $10.58 billion sale of its on-shore U.S. petroleum assets was closed at the end of October. Half of the proceeds will be used for share buy-backs and half will be used for a special dividend in early 2019 that I estimate will be about $1.75 per share or about 4% of the current share value.

BHP pays a dividend twice yearly. The trailing year annual amount was $2.36 per share. That amounts to a yield of 5.6%. However, unlike almost all North American companies, BHP tends to adjust its dividend down or up with earnings. For this and for reasons related to taxation, this is a stock that should be bought for potential capital appreciation and not for the dividend.

My analysis is based on $41.18 per share for the American Depository Receipts trading as BBL. The price to book value ratio does not seem unreasonably high at 2.0 considering that much of the assets may have been developed many years ago at lower costs and there is negligible purchased goodwill on the books.

The p/e ratio is attractive at 12.3. The return on equity is good at 16% for fiscal 2018. Given the commodity nature of this company, its earnings are inherently volatile and unpredictable.

This is a buy for investors seeking exposure to a diversified global non-precious-metals mining company. Investors should expect the stock performance to depend on world economic growth and on commodity prices.

Subscribe to Internet Wealth Builder here…