Are you a dividend investor looking for new sources of yields? Do you want those yields to be backed by solid company fundamentals? Today we focused on industrial metals and minerals stocks that offer sustainable yields, due to their significant profitability. We focused further by looking at only those stocks that analysts have rated as 'Buy'. We came up with a pretty interesting list - we hope you find it helpful in your search.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
We first looked for industrial metals & minerals dividend stocks. Next, we then screened for businesses that have strong bottom line profitability (Net Margin [TTM]>10%)(1-year operating margin>15%). Next, we then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks hold value that has yet to be priced in? Use this list as a starting-off point for your own analysis.
1) Vale S.A. (VALE)
| Sector: | Basic Materials |
| Industry: | Industrial Metals & Minerals |
| Market Cap: | $95.01B |
| Beta: | 1.55 |
Vale S.A. has a Dividend Yield of 3.16%, a Payout Ratio of 44.93%, a Net Margin of 32.64%, a Operating Profit Margin of 45.74%, and a Analysts' Rating of 2.30. The short interest was 1.55% as of 06/13/2012. Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil and internationally. The company is also involved in fertilizers, logistics, and steel businesses. Its Bulk Material segment engages in the extraction of iron ore and pellet production, as well as operation of Brazilian northern and southern transportation systems, including railroads, ports, and terminals related to mining operations.
2) BHP Billiton plc (BBL)
| Sector: | Basic Materials |
| Industry: | Industrial Metals & Minerals |
| Market Cap: | $146.94B |
| Beta: | 1.59 |
BHP Billiton plc has a Dividend Yield of 3.99%, a Payout Ratio of 25.60%, a Net Margin of 31.05%, a Operating Profit Margin of 43.96%, and a Analysts' Rating of 2.50. The short interest was 0.05% as of 06/13/2012. BHP Billiton Plc, together with its subsidiaries, operates as a diversified natural resources company. The company engages in the exploration, development, production, and marketing of oil and gas properties. It also involves in mining of bauxite, refining of bauxite into alumina, and smelting of alumina into aluminum metal; and mining of copper, silver, lead, zinc, molybdenum, uranium, gold, diamond, titanium, nickel, iron ore, metallurgical coal, and thermal or steaming coal.
3) Alliance Resource Partners LP (ARLP)
| Sector: | Basic Materials |
| Industry: | Industrial Metals & Minerals |
| Market Cap: | $2.07B |
| Beta: | 0.80 |
Alliance Resource Partners LP has a Dividend Yield of 7.29%, a Payout Ratio of 49.02%, a Net Margin of 20.22%, a Operating Profit Margin of 21.52%, and a Analysts' Rating of 2.00. The short interest was 0.84% as of 06/13/2012. Alliance Resource Partners, L.P. engages in the production and marketing of coal primarily to utilities and industrial users in the United States.
4) Rio Tinto plc (RIO)
| Sector: | Basic Materials |
| Industry: | Industrial Metals & Minerals |
| Market Cap: | $82.20B |
| Beta: | 1.65 |
Rio Tinto plc has a Dividend Yield of 3.26%, a Payout Ratio of 46.37%, a Net Margin of 11.19%, a Operating Profit Margin of 22.05%, and a Analysts' Rating of 1.70. The short interest was 0.71% as of 06/13/2012. Rio Tinto plc engages in finding, mining, and processing mineral resources. The company produces aluminum products, including bauxite, alumina, and aluminum; copper, gold, molybdenum, silver, and nickel; diamonds; minerals, such as borates, titanium dioxide feedstocks, high purity iron, metal powders, zircon, and rutile; thermal and coking coal, and uranium; and iron ore and salt. It primarily operates in Australia, North America, South America, Asia, Europe, and southern Africa.
*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
