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This FTSE 100 share is bouncing back hard. I’d buy it for the 6.5% dividend yield!

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As a value investor largely focused on the FTSE 100, I look for three things: stability, earnings, and dividends. Ideally, I want to invest in a boring business with reliable cash flows, strong earnings, and growing dividends.

A boring FTSE 100 business…

For some time, shares in miner BHP Group (LSE: BHP) have been on my watchlist. BHP is literally a ‘boring’ company – because, as one of the world’s largest diversified mining groups, it bores holes all over the globe.

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Based in Melbourne, Australia, and with its shares dual-listed in the UK and Oz, BHP is a world-leading resources company. This FTSE 100 firm extracts and process minerals, oil, and gas, with a workforce of over 72,000 employees and contractors, primarily in Australia and the Americas.

BHP is a world-leading producer of vital commodities, such as iron ore, copper, and metallurgical coal. It also has substantial interests in oil, gas, and energy coal. In other words, it’s a big, dirty, old-fashioned business – but with thousands of customers worldwide eager to buy its raw materials.

But an exciting FTSE 100 share?

One thing I admire about BHP is its ability to generate huge sums of cash to invest, grow, and reward its shareholders. Since 2016, it has reduced its net debt by $17bn, reinvested $27bn in development and growth, and returned over $29bn to shareholders. In my book, that’s mighty impressive, as well as sensibly balanced.

Of course, as a global miner, BHP’s shares were hit for six by the Covid-19-induced slowdown in world trade. Right now, BHP shares trade at 1,737p, down 11.1% in the past 12 months. They were as high as 2,023p on 30 July 2019, and crashed as low as 939.8p on 12 March this year.

BHP’s financials tick my boxes

For value investors seeking stable incomes, big is beautiful. At £96.6bn, BHP is a mega-cap company and currently #4 in the FTSE 100 by size.

Likewise, BHP’s financials stack up nicely when considering it as a value buy. Earnings of 146p a share translate into a price-to-earnings ratio of 11.9 at today’s 1,737p. The historic yearly dividend of 112.7p equates to a dividend yield of 6.5%, which is chunky by FTSE 100 standards.

BHP is primed for a bounce-back

BHP last paid a quarterly dividend on 24 March and, unlike many FTSE 100 members, it intends to continue these regular cash payouts.

The good news for shareholders is that BHP’s iron-ore production hit a record high in the June quarter, just as the price spiked back above $100 a tonne. This is due to resurgent demand from Chinese steel-makers as the world’s number two economy bounces back post-lockdown.

BHP is also big in copper, where production is running at similar levels to 2019, up 2% in the 12 months to the end of June. With copper prices also climbing, this should boost BHP’s impressive cash flows.

In short, BHP is a powerful, impressive, world-leading business whose shares are cheap while its future is bright. I would buy this FTSE 100 share as a value and income/dividend play today.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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