Vale Set to Join Peers in Doling Out More of Mining Windfall
(Bloomberg) -- Vale SA, the world’s second-largest iron ore producer, appears set to raise its dividend, joining other miners that are boosting payouts on the back of surging metal prices.
Vale pays separate dividends for each half of the year, with Bloomberg’s Dividend Forecasting team projecting a payout of 2.697 reais a share in March, up from 1.41 reais in September. The stock has almost doubled in the past year to about 98 reais ($17.85).
The Rio de Janeiro-based company resumed its dividend policy last year after halting payments in the wake of a tailings dam disaster in early 2019. It’s expected to outline dividend plans as part of its fourth-quarter results after the close of regular trading Thursday. The three-year growth rate for Vale’s dividend is estimated at 15%, Bloomberg data show.
Mining companies from BHP Group to Glencore Plc are rewarding investors for sticking with the industry through several lean years. Now with metal prices surging to multi-year highs on the prospect of resurgent demand and supply shortfalls, miners have become cash machines once again. Vale is expected to report its highest earnings before items since 2011.
One of Vale’s Australian iron-ore rivals, Fortescue Metals Group Ltd. doubled its interim payout year-on-year, while Grupo Mexico, which owns one of the world’s biggest copper producers, raised it by more than 50% from last March. In Brazil, materials companies are projected to lead dividend payouts on the benchmark index, with a projected 36% increase compared with 2020, Bloomberg data show.
While a recent $7 billion dam disaster settlement is expected to take a toll on Vale’s minimum payment, analysts still see room to offset that through extraordinary payments. In December, Vale management signaled an extraordinary dividend was “very likely” this year.
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