Assessing the Upcoming Dividend and Historical Trends of Vale SA
Vale SA (VALE, Financial) recently announced a dividend of $0.55 per share, payable on 2024-03-26, with the ex-dividend date set for 2024-03-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Vale SA's dividend performance and assess its sustainability.
What Does Vale SA Do?
Vale is a large global miner and the world's largest producer of iron ore and pellets. In recent years the company has sold noncore assets such as its fertilizer, coal, and steel operations to concentrate on iron ore, nickel, and copper. Earnings are dominated by the bulk materials division, primarily iron ore and iron ore pellets. The base metals division is much smaller, consisting of nickel mines and smelters along with copper mines producing copper in concentrate. Vale has agreed to sell a minority 13% stake in energy transition metals, its base metals business, which is expected to become effective in 2024, and which is likely the first step in separating base metals and iron ore.
A Glimpse at Vale SA's Dividend History
Vale SA has maintained a consistent dividend payment record since 2002. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Vale SA's Dividend Yield and Growth
As of today, Vale SA currently has a 12-month trailing dividend yield of 9.17% and a 12-month forward dividend yield of 13.36%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Vale SA's annual dividend growth rate was 26.40%. Extended to a five-year horizon, this rate increased to 36.10% per year. And over the past decade, Vale SA's annual dividends per share growth rate stands at an impressive 22.80%.
Based on Vale SA's dividend yield and five-year growth rate, the 5-year yield on cost of Vale SA stock as of today is approximately 42.82%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Vale SA's dividend payout ratio is 0.59.
Vale SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Vale SA's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Vale SA's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Vale SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Vale SA's revenue has increased by approximately 5.80% per year on average, a rate that underperforms approximately 64.62% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Vale SA's earnings increased by approximately -12.70% per year on average, a rate that underperforms approximately 70.4% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 16.10%, which underperforms approximately 43.23% of global competitors.
Next Steps
For value investors considering Vale SA, the company's history of consistent dividend payments, robust dividend growth rate, and a sustainable payout ratio are attractive attributes. Coupled with a strong profitability rank, Vale SA appears well-positioned to maintain its dividend payments. However, investors should also weigh the underperformance in revenue and earnings growth rates against these strengths. As the company navigates the dynamic mining sector, potential investors should consider the long-term implications of Vale SA's strategic focus on core minerals and its divestment from non-core assets. The upcoming separation of its base metals and iron ore businesses could also play a significant role in shaping Vale SA's future dividend prospects.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
