The BHP Group Ltd (ASX:BHP) Share Price Has Risen 1.6% Since the Start of 2024. Also in 2024, the Wesfarmers Ltd (ASX:WES) Share Price Is 4% Away from Its 52-Week High. This Article Explains Why It Could Be Worth Popping BHP and WES Shares on Your Watchlist.


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Investing in ASX blue-chip stocks such as BHP Group Ltd (ASX:BHP) and Wesfarmers Ltd (ASX:WES) is a strategy many investors consider for long-term stability and reliable returns. As we progress through 2024, both companies have shown significant market movements that make them worthy of attention. This article delves into why adding BHP and Wesfarmers shares to your watchlist could be a prudent decision.

BHP Group Ltd (ASX:BHP) Share Price Performance

BHP Group Ltd, one of the largest mining companies globally, has seen a 1.6% increase in its share price since the start of 2024. Founded in 1885, BHP has built a reputation for being a reliable dividend-paying investment, often included in ASX share portfolios, popular ETFs, LICs, and industry super funds.


Diverse Operations and Robust Performance

BHP’s operations are broadly classified into three main areas:

1. Copper and Related Minerals: This includes commodities like gold, uranium, silver, and zinc.

2. Iron Ore: A significant contributor to BHP's revenue.

3. Coal: Both metallurgical and energy coal play crucial roles in BHP's portfolio.


In the financial year 2023 (FY23), BHP demonstrated robust financial metrics, with a Return on Invested Capital (ROIC) of 28.10% and a revenue growth rate of 22.7% compounded over recent years. These figures are indicative of a mature business that continues to deliver substantial returns to its investors. With an ROIC well above the 10% threshold, BHP ensures that its cost of capital remains comfortably low, underscoring its financial health and sustainability.


One quick method to assess BHP's share price valuation is through its dividend yield. Currently, BHP offers a dividend yield of approximately 5.67%, compared to its five-year average of 9.38%. This suggests that BHP shares are trading below their historical average yield, presenting a potentially attractive buying opportunity for dividend-focused investors.

Wesfarmers Ltd (ASX:WES) Share Price Insights

Founded in 1914, Wesfarmers Ltd is a diversified conglomerate based in Perth, Australia, with operations spanning retail, chemicals, fertilizers, industrial, and safety products. As of 2024, Wesfarmers is trading just 4% below its 52-week high, signaling strong market performance and investor confidence.


Wesfarmers operates akin to a publicly listed private equity firm, with a history of acquiring, optimizing, and divesting businesses for profit. Notable among its acquisitions is the Coles Group, purchased in 2007 and spun out in 2018. However, the crown jewel in Wesfarmers' portfolio is Bunnings, Australia’s leading hardware and home improvement retailer, accounting for over 50% of the company’s operating profit. Wesfarmers acquired the remaining 52% of Bunnings it didn’t own in 1994 for $594 million.


In addition to Bunnings, Wesfarmers owns several other prominent brands, including Kmart, Target, Officeworks, Blackwoods, and Priceline Pharmacy. This diversification provides Wesfarmers with a stable revenue stream and reduces its exposure to sector-specific risks.


Wesfarmers is renowned for its quality assets and consistent dividend payouts. With Bunnings, Kmart, and Officeworks under its belt, Wesfarmers ensures a steady cash flow, which is vital for maintaining its dividend policy. The company’s ability to manage and grow its portfolio of businesses further solidifies its position as a leading blue-chip stock on the ASX.

Investment Considerations for BHP and Wesfarmers

Both BHP and Wesfarmers occupy dominant positions in their respective industries. BHP’s extensive portfolio of mining assets and its strong financial metrics make it a reliable choice for investors seeking stability and growth. Similarly, Wesfarmers' diverse operations and strategic acquisitions ensure it remains a powerhouse in the retail and industrial sectors.


The consistent revenue growth and high ROIC of BHP highlight its operational efficiency and ability to generate shareholder value. On the other hand, Wesfarmers’ successful acquisition strategy and focus on high-performing assets like Bunnings underscore its growth potential and financial robustness.


The current dividend yields of both companies offer insights into their share price valuations. While BHP’s yield is slightly below its historical average, it still provides an attractive income stream for investors. Wesfarmers’ dividend consistency and quality asset base further enhance its appeal as a long-term investment.


Given their strong market performance, robust financial health, and reliable dividend payouts, both BHP Group Ltd (ASX:BHP) and Wesfarmers Ltd (ASX:WES) present compelling cases for inclusion in any investor’s watchlist. As we navigate through 2024, these blue-chip stocks offer stability, growth potential, and consistent returns, making them worthy of close consideration.