Despite a huge rally, materials stocks have yet to recover all their lost ground and lag the broader market. Although demand has rebounded dramatically, it’s still possible to buy into the materials sector at prices that are well below the historical average. Here’s a growth and income powerhouse that will pay you to wait for global growth to normalize.

Commodity prices are inherently volatile; few goods are as subject to the laws of supply and demand as the basic materials that fuel global industry.

The global standard of living has continued to rise over the past two decades: Child immunization rates have increased over 90 percent; electricity consumption is up 74 percent; and access to safe drinking water is up 17 percent. Asian nations account for much of this improvement.

Rising incomes and improving living standards inevitably drive consumption, triggering a corresponding increase in commodity prices. Car purchases typically pick up when household incomes rise, increasing consumption of fuel and the metals used to produce the vehicles themselves. Homeownership levels also head higher, pushing up the price of copper used to produce pipes, wire and the appliances connected to them.

BHP Billiton (NYSE: BHP) is one of the safest ways for income investors to add exposure to resurging demand for vital resources.

The company’s diverse product mix is its greatest asset. As the largest publicly traded mining outfit, BHP Billiton produces a wide range of commodities, including iron ore, copper, nickel, thermal and metallurgical coal, manganese, diamonds, crude oil and natural gas. Elevated demand for any of these products pads the company’s bottom line.

The firm’s Australian operations account for the bulk of its production, making the company the supplier of choice to key Asian markets. Over the past two years, the company’s sales to China have grown an average of 5.1 percent, and sales to the rest of Asia have jumped 38.3 percent over the same period.

Although Asia accounts for about half of BHP Billiton’s revenues, there’s more to the company’s growth story. About a fifth of revenues come from sales to Europe, and the company has major customers throughout the world, including Africa.

A diverse geographic footprint and product line enabled BHP Billiton to weather the economic downtown with grace, taking advantage of the opportunity to make smaller acquisitions on the cheap and build up its resource pipeline. And the company had amassed $10.8 billion in cash as of its most recent quarterly report; management has plenty of capital for strategic acquisitions.

Earnings in the back half of 2009 beat consensus expectations by 11 percent, prompting management to increase the company’s semiannual dividend by 2 cents. At present the stock yields a modest 2.2 percent, but further dividend increases could be in the cards.

Management expressed caution about the strength of the global economic recovery in its conference call and noted that it would hold off on share buybacks in the near term. But BHP Billiton has a history of shareholder friendly moves and hasn’t hesitated to add value through stock buybacks or dividend increases.

But assuming that the recovery takes longer than anticipated to develop or global markets catch a second wave down, the current dividend is secure. BHP Billiton’s payout ratio is just 61 percent, and free cash flow is more than twice the $4.5 billion disbursed in annual dividends.

Why to Buy
BHP BILLITON (NYSE: BHP, $79.18)

• Produces a wide range of in-demand commodities

• Proximity to Asia makes it a prime supplier

• Most secure dividend in the industry