The 40-year high inflation rates, global supply chain disruptions, and rising geopolitical tensions have caused the broader markets to pull back lately, causing investors to bear significant losses on their investment bets. Investors looking for stable returns amid the surging market volatility have been betting on dividend stocks at this juncture.

Quality dividend-paying companies tend to have sufficient cash flows and stable earnings growth prospects to sustain their payouts even in difficult market conditions. Moreover, with an economic rebound around the corner, these companies are optimistic about their innovative business operations. Thereby, investors’ interest in this space is evident in the iShares Core High Dividend ETF’s (HDV) 4.2% returns in the past three months.

High dividend-yielding stocks Vale S.A. (VALE) and ZIM Integrated Shipping Services Ltd. (ZIM) could thus be worth adding to your watchlist. They have a ‘Strong Buy’ rating in our POWR Ratings system.

Vale S.A. (VALE)

Headquartered in Rio de Janeiro, Brazil, VALE and its subsidiaries produce and sell iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Ferrous Minerals, Base Metals, and Coal segments.

On February 23, 2022, VALE and Hunan Valin Iron & Steel Group signed a Memorandum of Understanding (“MoU”) to pursue ironmaking solutions focused on reducing CO2 emissions. This is expected to enhance sustainable production in the company.

VALE’s current dividend translates to a 17.54% yield, and its four-year average yield is 5.16%. Its dividend has grown at a CAGR of 136.73% for the past three years and at a CAGR of 88.10% for the past five years.

For the fiscal 2021 third quarter ended September 30, 2021, VALE’s net operating revenue came in at $12.68 billion, up 17.8% year-over-year. Its net income came in at $3.89 billion, up 33.6% year-over-year, while its EPS increased 33.3% year-over-year to $0.76.

Analysts expect VALE’s EPS to increase 11.1% per annum for the next five years. Over the past month, the stock has gained 10.1% to close yesterday’s session at $17.18.

VALE’s POWR Ratings reflect its solid prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The company has an overall A rating, equating to a Strong Buy in our proprietary rating system.

VALE has an A grade for Quality and a B grade for Value. It is ranked #3 of 35 stocks in the Industrial – Metals industry. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for VALE.

ZIM Integrated Shipping Services Ltd. (ZIM)

Headquartered in Haifa, Israel, ZIM and its subsidiaries provide container shipping and related services in Israel and internationally. It operates a fleet of 101 vessels with a global network of 69 weekly lines. 

On November 17, 2021, Eli Glickman, ZIM’s President & CEO, said, “Reflecting ZIM’s strong outlook and extremely positive container liner market fundamentals, we have once again raised our full-year 2021 guidance. As an innovative digital leader of seaborn transportation and logistics services, we are well positioned for the future.”

The four-year average dividend yield for ZIM is 2.42%, its current dividend translates to a 14.53% yield. It paid a $2.50 per share quarterly dividend on December 27, 2021.

ZIM’s income from voyages and related services increased 209.7% year-over-year to $3.14 billion for the third quarter ended September 30, 2021. Its profit came in at $1.46 billion, up 913.1% year-over-year. Also, its EPS came in at $12.16, up 794.1% year-over-year.

Analysts expect ZIM’s revenue to increase 115.8% year-over-year to $3.49 billion for the period ended March 2022. Its EPS is expected to grow 133.8% year-over-year to $12.09 for the same period. In addition, it surpassed Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 229.8% to close yesterday’s trading session at $68.80.

ZIM has an overall A rating, equating to a Strong Buy in our proprietary rating system.

In addition, it has an A grade for Momentum and a B grade for Growth, Value, Sentiment, and Quality. ZIM is ranked #3 of 45 stocks in the B-Rated Shipping industry. Click here to see the additional POWR Ratings for ZIM (Stability).

VALE shares were trading at $17.27 per share on Wednesday afternoon, up $0.09 (+0.52%). Year-to-date, VALE has gained 23.18%, versus a -11.16% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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