Macquarie says BHP Billiton share price worth $40 after share buy-back

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The BHP Billiton Limited (ASX: BHP) share price is flat today, but climbed 3.5% yesterday after the big iron ore miner announced it had completed a US$5.2 billion off-market share buy-back and would pay a US$1.02 per share dividend to all eligible shareholders on the register as at January 11, 2019.

The final buy-back price was set at A$27.62, which equalled a 14% discount to the ‘market price’ of $32.14. The total buyback represented 8.3% of the issued capital of BHP Group Limited.

According to reports in the Fairfax press analysts at Macquarie Group Ltd (ASX: MQG) are impressed with the buy-back price and think that “BHP could return a further US$3 billion to shareholders during the second half of the current financial year, most likely through an on-market buy back in the UK”.

The sugar hits for BHP shareholders could keep coming then, with the A$1.42 per share FX-adjusted dividend representing a yield of 4.4% alone based on today’s BHP share price of $32.14.

BHP is also due to pay an interim dividend this March and boasts that it has now already returned US$21 billion to shareholders over the past two years.

Elsewhere Rio Tinto Limited (ASX: RIO) is also rewarding shareholders due to the iron ore price rise with its own US$3.2 billion off and on-market share buyback.

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