Vale SA (ADR) (VALE), IAMGOLD Corp (USA) (IAG): 1 Dividend-Focused Industry Keeps the Yields Growing

If you’re on the hunt for income in this low-yield environment, I have just the industry for you. Not only are does it offer investors high current yields, but these payouts have also been heading higher in recent years. So, if you’re prospecting for yield, it’s time for you to start digging in to the mining industry.

Last year, the top 40 miners in the world increased dividend payments by 9% for a total payout of $38 billion, according to a recent report by PwC. Overall, dividends at the top 40 mining companies are strong across the board with an average yield of around 3.7%. To help you on your journey as you dig into the mining industry for dividends, here are five top dividend payers worth a closer look as you explore for dividend gold.

Vale SA (ADR) (NYSE:VALE) Brazilian iron ore miner Vale SA (ADR) (NYSE:VALE) has already declared that it will pay out at least $4 billion in dividends to investors this year. That represents a total payment of approximately $0.78 per ADR which implies a yield of around 5.3%. Unfortunately, that’s down from the $6 billion or $1.17 per ADR Vale SA (ADR) (NYSE:VALE) paid out last year and the massive $9 billion payout or $1.72 ADR it handed over to investors in 2011. Overall though, Vale SA (ADR) (NYSE:VALE)’s payout is still well ahead of the $2.6 billion in dividends it averaged from 2007 through 2010. The key for Vale SA (ADR) (NYSE:VALE) to get that dividend back to 2011 levels is rising iron ore prices which represent 68% of its revenue in the meantime you are still paid very well to hold on to this stock.

IAMGOLD Corp (USA) (NYSE:IAG)
Canadian gold miner IAMGOLD Corp (USA) (NYSE:IAG) pays a semi-annual dividend of $0.125 per share which equates to a current yield of about 4.45%. As the company’s name would imply, its revenues are generated by its gold mining operations. Currently, the company has six gold mines across three continents as well as several potential projects in the works. The company’s current priorities given the slumping gold market include cash preservation, cost reduction and disciplined capital allocation. While the dividend looks safe for now, given the company’s stated policy of not jeopardizing is strong balance sheet, it could be reduced if gold prices fall further.

Source: Gold Footpath by George Hodan

Rio Tinto plc (ADR) (NYSE:RIO)
Anglo-Australian miner Rio Tinto plc (ADR) (NYSE:RIO) has consistently grown its dividend over the past few years, which is a trend not likely to end anytime soon. At over 4%, the company’s semi-annual dividend is well covered by it’s diversified mining revenue. That being said, the miner has been hit by asset impairment inspired losses after two major acquisitions failed to pan out as planned. These botched deals mean that Rio has a long comeback ahead of it as it tries to prudently grow while still rewarding shareholders by its generous dividend.

Newmont Mining Corp (NYSE:NEM)
With a current yield of 4.05%, gold and copper miner Newmont Mining Corp (NYSE:NEM) offers investors a top dividend yield. However, in light of falling gold prices, that dividend isn’t likely to head much higher. Newmont has instead been conserving capital by cutting costs. Overall, spending is down 13% year-over-year with capital spending taking the biggest hit as it has been cut by 31%. While that will help the company’s profitability, it’s dividend policy is tied to the price of gold. For you gold bulls out there, if prices rise above $2,000 an ounce Newmont investors could see an annualized dividend of more than $3.00 per share, which would double the current rate.

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)
Copper and gold miner Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has endured a difficult year. It had to work hard to close its massive oil and gas acquisitions while also dealing with falling gold and copper prices. The only real solace for investors has been the company’s 4.05% dividend. The good thing here for Freeport investors is that the oil and gas acquisitions take some risk out of its business as it reduces the company’s exposure to mining from 100% down to 74%. The company believes it has the assets in place to maintain a strong balance sheet, continue its current dividend while also growing its business.

Final Foolish thoughts
The mining industry is filled with golden opportunities to add income to your portfolio. These five top-paying stocks offer a great place to start to a journey as you search for dividend gold. One final thought, many miners pay investors bi-annually or have dividends that vary based on profits which is why its important that you understand the payout policy before committing any capital.

The article 1 Dividend-Focused Industry Keeps the Yields Growing originally appeared on Fool.com.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads and Freeport-McMoRan Copper & Gold.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.