In this article, we discuss 5 dividend stocks with over 10% yield. If you want our detailed analysis of these stocks, go directly to 10 Dividend Stocks with Over 10% Yield.
5. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 25
Dividend Yield as of March 2: 13.67%
Vale S.A. (NYSE:VALE) produces and sells iron ore and iron ore pellets that are used as raw materials in steelmaking. The company is headquartered in Rio de Janeiro, Brazil. Exane BNP Paribas analyst Sylvain Brunet on February 9 upgraded Vale S.A. (NYSE:VALE) to Outperform from Neutral with a $20.50 price target.
On February 25, Vale S.A. (NYSE:VALE) approved the distribution of dividends to shareholders of $3.5 billion, coming in at $0.73 per share. The dividend is payable on March 16, to shareholders of record on March 10. Vale S.A. (NYSE:VALE)’s dividend yield on March 2 was 13.67%. The company reported its fourth quarter results on February 24, posting earnings per share of $1.46, exceeding estimates by $0.65.
Vale S.A. (NYSE:VALE) expects Russia’s invasion of Ukraine to increase the premium that steelmakers pay for iron ore pellets beginning in Q2, as the two countries together account for approximately 30% of the 120 million ton global market. The company also expects the Russian invasion will likely accelerate gains in the price of nickel, a market that was already characterized by low inventories.
In Q4 2021, 25 hedge funds were bullish on Vale S.A. (NYSE:VALE) according to Insider Monkey’s database, as compared to 27 funds in the prior quarter. Fisher Asset Management held the biggest stake in the company, with roughly 31 million shares worth $434.3 million.
Here is what Miller Value Partners has to say about Vale S.A. (NYSE:VALE) in its Q3 2021 investor letter:
“Vale (VALE) was the top detractor over the quarter, falling 32.6% in sympathy with iron ore’s 48% decline from record highs on China capacity curbs and growing fears of financial issues within the property sector. Vale reported Q2 EBITDA of $11.24Bn, slightly below consensus of $11.47Bn on higher than expected iron ore cash costs. Free cash flow of $6.5Bn (35% annualized yield) came in well ahead of expectations, driving $2.6Bn of stock buybacks and a 1H21 dividend of $7.6Bn, implying year-to-date (YTD) shareholder returns of roughly $13.8Bn (19% of the current market cap). Management maintained FY21 production guidance for iron ore of 315-335 Metric tons (Mt) and lowered year-end 2022 exit capacity to 370Mt (from 400Mt) due to Northern System licensing delays. Additionally, the company hosted their annual Investor Day, outlining new production initiatives aimed at becoming a key supplier to steelmakers in light of decarbonization goals.”
4. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Hedge Fund Holders: 26
Dividend Yield as of March 2: 13.91%
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) was founded in 1953 and is headquartered in Rio de Janeiro, Brazil, selling oil and gas in Brazil and internationally. On February 24, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) reported its Q4 earnings, posting an EPS of $0.71, topping estimates by $0.06. The $26.22 billion revenue topped market consensus by $1.21 billion.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) reported strong Q4 free cash flow and announced a robust dividend, in line with its recently released multi-year strategy. As of December quarter end, debt was reduced to $59 billion, and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) announced a BRL 2.86 dividend to be paid in May.
On December 15, Goldman Sachs analyst Bruno Amorim upgraded Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) to Buy from Neutral with a $14.20 price target. The analyst said he now sees a better risk/reward for the company and that cash returns in 2022 provide a cushion, as he assumed Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) will pay not only the 60% stated in their dividend policy but also any excess cash generation in 2022.
Rajiv Jain’s GQG Partners is the largest Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) shareholder, with 187.6 million shares worth more than $2 billion. Overall, 26 hedge funds were bullish on the stock at the end of December 2021.
3. Braskem S.A. (NYSE:BAK)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 2: 14.02%
Braskem S.A. (NYSE:BAK) is a Brazilian company that produces and sells petrochemicals, chemicals, and resins to customers in Brazil, United States, Europe, and Mexico. HSBC analyst Lilyanna Yang upgraded Braskem S.A. (NYSE:BAK) to Buy from Hold with a $22 price target on January 26.
On December 9, Braskem S.A. (NYSE:BAK) declared a $2.71 per share dividend, which was paid on December 30, to shareholders of record on December 13. Braskem S.A. (NYSE:BAK)’s dividend yield on March 2 came in at 14.02%.
Braskem S.A. (NYSE:BAK) rose 10.2% pre-market on January 28 after Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) and Novonor canceled the share offering of their stakes in the company, citing instability of the capital market conditions and the levels of demand and price not being appropriate for the transaction.
According to Insider Monkey’s Q4 data, 4 hedge funds were bullish on Braskem S.A. (NYSE:BAK), with combined stakes of $4.2 million, as compared to 18 funds in the prior quarter, holding stakes in Braskem S.A. (NYSE:BAK) worth $18.60 million. Citadel Investment Group is one of the leading shareholders of the company, with 27,415 shares worth $578,000.
2. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Number of Hedge Fund Holders: 33
Dividend Yield as of March 2: 14.19%
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is a leading global carrier based in Israel, that provides container shipping, refrigerated cargo, and logistics services. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) delivers a yield of 14.19% as of March 2.
On November 17, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) declared a $2.50 per share interim dividend. The dividend was paid on December 27, which reflects approximately 20% of the quarterly net income. In 2022, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) will distribute 30-50% of its total net income for 2021.
On January 28, Jefferies analyst Randy Giveans raised the price target on ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) to $100 from $80 and kept a Buy rating on the shares, which he added to the firm’s “Franchise Picks” list after the company increased its Q4, 2022, and 2023 EPS estimates as container freight rates remain at all-time highs. The company’s new contracts will boost revenues in the second half of 2022 and ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is set to distribute a “large” annual dividend in March, followed by quarterly dividends of 20% of earnings, the analyst told investors.
A total of 33 funds were bullish on ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) during Q4 2021, up from 22 funds in the earlier quarter. Marshall Wace LLP held the largest stake in the company, with 2.70 million shares worth $159.3 million.
Here is what Evermore Global Advisors has to say about ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) in its Q2 2021 investor letter:
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
1. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Number of Hedge Fund Holders: 20
Dividend Yield as of March 2: 26.79%
Star Bulk Carriers Corp. (NASDAQ:SBLK) is based in Maroussi, Greece, and the shipping company specializes in the ocean transportation of dry bulk cargoes worldwide. Star Bulk Carriers Corp. (NASDAQ:SBLK) transports iron ores, coal, grains, and minor bulks such as bauxite, fertilizers, and steel products.
On February 16, Star Bulk Carriers Corp. (NASDAQ:SBLK) declared a $2.00 per share quarterly dividend, a 60% increase from its prior dividend of $1.25. The dividend is payable on March 16, to shareholders of record on March 2.
Deutsche Bank analyst Amit Mehrotra reported on February 22 that he sees a path for Star Bulk Carriers Corp. (NASDAQ:SBLK) to reach $70 per share. “Very simply, Star Bulk Carriers Corp. (NASDAQ:SBLK) is now becoming investible for the first time by large institutional investors, which warrants an update to our long-held bullish stance on the company and the outlook for equity value per share” said Mehrotra, who kept a Buy rating on Star Bulk Carriers Corp. (NASDAQ:SBLK).
The company reported its Q4 results on February 16, posting earnings per share of $2.96, topping market consensus by $0.44. The $427.64 million revenue gained approximately 196% year-over-year, surpassing analysts’ estimates by $50.39 million.
Among the hedge funds tracked by Insider Monkey, 20 hedge funds were bullish on Star Bulk Carriers Corp. (NASDAQ:SBLK) in Q4 2021, with collective stakes of $733.2 million. Oaktree Capital Management is the biggest stakeholder of the company, with approximately 26 million shares worth $589.2 million.
Here is what Massif Capital has to say about Star Bulk Carriers Corp. (NASDAQ:SBLK) in its Q3 2021 investor letter:
“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.
SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per share range, depending on movement in net working capital.
We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top or the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.
Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…” (Click here to see the full text)
You can also take a look at Gillson Capital Stock Portfolio: 10 Best Dividend Stocks and Billionaire Paul Singer’s 10 Best Dividend Stocks.
