The resources sector has proven to be a very good place to invest once again in 2019.
Since the start of the year the S&P/ASX 200 Resources index has pushed an impressive 18.9% higher.
Key drivers of this strong rise have been the performances of the three shares listed below. Here’s why they are smashing the market in 2019:
The BHP Group Ltd (ASX: BHP) share price has provided a return of 15% since the start of the year, excluding dividends. If you add in the mining giant’s interim and special dividends this return stretches to over 21%. There have been a number of catalysts for this strong return, including a solid production performance, favourable commodity prices, and the company’s decision to return funds to shareholders via a share buyback and special dividend.
The Fortescue Metals Group Limited (ASX: FMG) share price has been a very strong performer in 2019 with a gain of 95% excluding dividends or a stunning 117% if you include them. Investors have been fighting to get hold of Fortescue’s shares due to a material rise in iron ore prices following supply issues in both Brazil and Australia. Both low grade and benchmark fines have hit multi-year highs this year, putting Fortescue in a position to deliver a bumper full year result in FY 2019. The good news for the company is that some analysts believe that iron ore prices can continue climbing higher in the near term.
The Rio Tinto Limited (ASX: RIO) share price has smashed the market with a return of 31% since the turn of the year excluding dividends. If you include its final dividend, this return increases to just under 39%. As with the others, this has been driven by favourable commodity prices, strong production, and its decision to return excess funds to shareholders.
Overall, I believe this demonstrates why having a little exposure to the resources sector can be a great thing for a portfolio.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019