5 Best Dividend Stocks According to Howard Marks’ Oaktree Capital Management

2. Vale S.A. (NYSE:VALE)

Number of Hedge Fund Holders: 27
Dividend Yield as of February 8: 15.9%
Oaktree Capital Management’s Stake Value: $83,460,000

Vale S.A. (NYSE:VALE) is a Brazilian mining company and is one of the largest producers of iron ore and nickel in the world. In Q3 2021, 27 hedge funds tracked by Insider Monkey held stakes in the company, the same as in the previous quarter. These stakes hold a value of roughly $2 billion.

Vale S.A. (NYSE:VALE) currently pays a semi-annual dividend of $1.542 per share, with an attractive dividend yield of 15.9%. The company’s policy of paying dividends twice a year resulted in tremendous cash flow performance, where it was able to pay roughly $14 billion in dividends during the first nine months of 2021. In Q3 2021, Oaktree Capital held about 6 million shares in Vale S.A. (NYSE:VALE), worth over $83.4 million. The company represented 1.16% of the hedge fund’s 13F portfolio.

Due to the increasing prices of iron ore, Wall Street analysts provided a positive stance on Vale S.A. (NYSE:VALE). In January, both RBC Capital and Jefferies raised their price targets on the stock to $17 and $16, respectively.

Miller Value Partners mentioned Vale S.A. (NYSE:VALE) in its Q3 2021 investor letter. Here is what the firm has to say:

“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.”