BHP dividend yield, XRO price-sales both below long-term averages

Two of the ASX's most-watched stocks are trading at valuation levels well below their own historical averages, based on the metrics each is most commonly judged on.

BHP Group Ltd's dividend yield sits at 3.36%, compared with a five-year average of 6.86%. Xero Ltd's price-sales ratio trades at 9.25 times, less than half its five-year median of 18.65 times.

The BHP yield compression reflects a dividend that has fallen alongside a relatively steady share price. Last year's payout was below the three-year average, according to analysis published by Rask. Iron ore, the company's biggest earnings driver, has traded in a narrower range than in the 2020-2022 cycle. BHP is also shifting capital toward copper and fertiliser projects, which take longer to return cash to shareholders. The lower yield does not automatically signal a cheap stock. It could mean the stock is expensive if dividends stay depressed.

Xero's price-sales ratio tells a different story. The company has never paid a dividend, so earnings-based multiples are less useful when profits are still scaling. Revenue has grown steadily as Xero pushes into the US market from its base in New Zealand, Australia and the UK. The 9.25x multiple is a steep discount to the five-year median of 18.65x. The Rask analysis notes that the lower multiple likely reflects slower growth expectations or the market's cautious view on the US expansion timeline.

Simple valuation multiples are a starting point, not a verdict. BHP's dividend history and commodity price exposure are tracked on the BHP stock page. For Xero, the sales multiple will tighten or widen depending on US customer additions and churn rates, both reported half-yearly. Both stocks trade below their own historical marks. The reasons differ.