BHP Billiton Limited (ADR) (BHP), Vale SA (ADR) (VALE), Rio Tinto plc (ADR) (RIO): Which Global Mining Company Should You Buy?

On the contrary, however, dividends for Rio Tinto plc (ADR) (NYSE:RIO) and Vale have been falling due to the intense downward demand cycles the companies are facing. Rio Tinto plc (ADR) (NYSE:RIO) has taken a nose dive in terms of dividends, but slowly and gradually the situation is improving as the company is selling off its smaller holding to increase returns.

Moreover, BHP Billiton Limited (ADR) (NYSE:BHP) has a moderate payout ratio of 38%, which allows the company to retain enough cash to fuel its growth prospects. While, on the other hand, Vale SA (ADR) (NYSE:VALE)’s payout ratio is 108%, which means the company has to struggle to invest in long term growth projects, which might help the company to provide its investors with greater returns. As evident from the table, BHP also scores high on the ROE metric, whereas the other two companies struggle with their ROEs.

Final thoughts

BHP Billiton Limited (ADR) (NYSE:BHP), among its competitors, is in a much better position to deserve your investment because the company is well diversified with its presence in Oil and Gas development sector as well. Most recently, the company has been focusing on increasing its sales in the emerging markets. These growth markets offer huge opportunities, since lack of infrastructure in these markets has aptly increased the demand for iron ore and copper. Moreover, the company seeks to invest more on petroleum and copper targets, where profit margins can be strong.

On the contrary, Vale is struggling with its sales, which have dropped in the recent quarter due to Vale SA (ADR) (NYSE:VALE)’s over-dependence on the Chinese economy, which has slowed down recently.

Rio Tinto plc (ADR) (NYSE:RIO), on the other hand, is struggling to improve its debt ratios and bolster its balance sheet by paying off its debt. The company has settled down to sell off profitable businesses; one common example is its deal with China Molybdenum. To my understanding, this has led Rio Tinto plc (ADR) (NYSE:RIO) to lose its sight for growth to enhance further prospects, so that it can provide constant returns to its investors. A recent drop in its dividends is a testament to its shortsighted strategies to provide its investors with returns on their investments. So, all in all, in the current economic scenario, BHP Billiton Limited (ADR) (NYSE:BHP)’s stock presents a better opportunity to invest in.

The article Which Global Mining Company Should You Buy? originally appeared on Fool.com and is written by Zain Raza.

Zain Raza has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads. Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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