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Woolworths Group Ltd stock and BHP Group Ltd (ASX:BHP) shares are 2 ASX shares to watch

The Woolworths Group Ltd (ASX:WOW) share price is up 8.0% since the start of the 2023. The BHP Group Ltd (ASX:BHP) share price is about 8% off its 52-week low.

WOW share price

Founded in 1924, Woolworths is a retail operator in Australia and New Zealand with over 3,000 stores and over 100,000 employees. It is currently the Australia’s largest company in terms of revenue and market share.

Woolworths’ main operations include supermarkets (under the Woolworths brand in Australia and Countdown in New Zealand), retailing through its discount department stores under the Big W brand, and business-to-business (B2B) brands like PFD. Overwhelmingly, it’s 35%+ share of Australian supermarkets is its crown jewel.

Woolworths is a very popular choice for many ASX investors seeking dividend income. It consistently pays a fully franked dividend, usually at a yield of over 3%, and offers a very defensive earnings stream. It’s competitive advantage is probably best summarised as scale (distribution, low costs, etc.) and proximity (most shoppers still shop based on distance to the supermarket).

BHP share price

BHP Group (formerly BHP Billiton) is a diversified natural resources company producing commodities that was founded in 1885.

BHP’s principal business lines are mineral exploration and production. BHP’s assets, operations and interests are separated into three focus areas: Copper and related minerals (e.g. gold, uranium, silver, zinc, etc.), Iron Ore, and Coal (i.e. metallurgical and energy).

BHP shares are often seen as a reliable dividend paying investment and is a common constituent of an ASX share portfolio. If you own an popular ETF or LIC, or invest with Industry Super, chances are you have exposure.

Share price valuation

As a blue chip, one way to have a ‘quick read’ of where the WOW share price is, is to study something like dividend yield thru time. Remember, the dividend yield is effectively the ‘cash flow’ to a share holder, but it can be influenced by yearly or bi-yearly fluctuations. Currently, Woolworths Group Ltd shares have a dividend yield of around 2.91%, which compares to its 5-year average of 2.66%. Put simply, WOW shares are trading below their historical average dividend yield.

Since it is a more mature-style business, the BHP share price is offering a historical dividend yield of around 5.67%, which compares to its 5-year average of 9.38%. The Rask websites, especially our Rask Education platform, offer free tutorials explaining Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). Both of these models would be a better way to value the BHP share price.

Before jumping into either of these companies, I strongly encourage you to check this out…

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