Vale – High dividend yields and growth, what more could you ask for?


Vale is a metal mining company in Brazil.  Again, this is a low P/E ratio stock at around 5.72.  They have a 5 year EPS growth rate of 26.34% and a 5 year revenue growth rate of 24.59%.  These are really good growth numbers for a company that is worth $126 billion.

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Leveraging Brazil’s Natural Resources

Brazil is producing a lot of the world’s raw materials.  They have a lot of land and a lot of natural resources.  I think companies like Vale that mine these materials out will be in good shape for many years to come.  You have increasing demand from other emerging markets like China and India that are running out of raw materials and have to export them.

High Dividend Yield

They also have a very nice dividend yield of 7.15%.  The average yield for the S&P 500 is around 2%.  In fact, because Vale has such a strong balance sheet, you could invest in them purely as an income investment.  Even so, this stock has really good growth potential.

In the Business of Making Money

This company has a net profit margin of 45.42%.  The average for the metal mining industry is 4.38%.  This shows in the bottom line.  Their net income went from $17 billion to $22.9 billion in 2011.

Although their cash levels went down considerably last year, they still have a strong balance sheet.  They have a low debt to equity ratio of .66 compared to the average which is 1.30.  Their ROE and ROA is high as well.  The ROE is 29.45%.  The metal mining industry average is 16.  The ROA is 17.78%.  The industry average is 8%.

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Remember that investing is a very risky activity.  You can lose all or most of your initial investments.  Consult a licensed financial advisor before implementing any investment strategy.  Historical performance is no guarantee of future performance.  No one can accurately predict the future, at least not consistently over time.  The writer of this article and owner of this website do not own any of the stocks mentioned in this post.

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