Looking for cheap high yield stocks? Check out these 2 miners

As the world moves towards a net-zero carbon economy, the demand for raw materials from the metallurgical and mining industries is expected to soar. Commodities will be at the forefront of decarbonization and electrification efforts as economies shift from fossil fuels to wind and solar power generation, battery and fuel cell-powered electric vehicles (EVs) and the production of hydrogen.

Because rise in inflation and surging COVID-19 cases continue to scare investors, the market is expected to remain turbulent in the near term. However, high-dividend stocks could be ideal bets in times of market volatility to ensure a steady stream of income.

Thus, we think it might be wise to bet now on fundamentally sound mining stocks BHP Group (BHP) and Rio Tinto Group (Rio). They are currently yielding over 8% and trading at discounted valuations.

BHP Group (BHP)

Based at melbourne, Australia, BHP explores, develops and produces oil and gas properties and mines copper, silver, zinc, molybdenum, uranium, gold, iron ore and metallurgical and energy coal in the international scale. Oil; The copper; Iron-ore; and Coal are the company’s operating segments.

BHP’s operating profit increased 80% year-on-year to $25.91 billion for the year ended June 30, 2021. Its net income operating cash rose 73% from its value a year ago to $27.23 billion. And the company’s underlying EBITDA jumped 69% from the prior year period to $37.38 billion.

The stock has gained 20.8% in price over the past three months and 16.4% over the past month.

BHP’s $6.02 annual dividend yields 8.97% on its current share price. On September 21, the company paid a quarterly dividend of $4. It has a four-year average dividend yield of 6.3%.

In terms of forward EV/EBIT, BHP’s 5.70x is 55.9% below the industry average of 12.93x. Additionally, its non-GAAP P/E of 11.07x is 28.2% below the industry average of 15.42x.

BHP POWR Rankings reflect this promising prospect. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.

BHP is also rated B for growth and quality. Within the Industrial – Metals industry, it is ranked #3 out of 35 stocks. To view additional POWR ratings for Stability, Value, Momentum and Sentiment for BHP, Click here.

Rio Tinto Group (Rio)

RIO is a London-based global mineral exploration, mining and processing company. The Company’s product portfolio includes aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore and uranium. In addition, it owns and operates surface and underground mines, mills, refineries, smelters, power plants, and research and service facilities.

This month, RIO agreed to buy four battery-electric trains in Western Australia’s Pilbara region as part of its strategy to cut carbon emissions by 50% by 2030.

Last month, RIO agreed to acquire the Rincon lithium project in Argentina from Rincon Mining for $825 million. The company is controlled by funds managed by private equity group Sentient Equity Partners. This transaction illustrates RIO’s commitment to growing its battery materials business and strengthening its portfolio for the global energy revolution.

During the six months ended June 30, 2021, RIO’s revenue increased 70.9% year-over-year to $33.08 billion. Its operating profit rose 198.1% year-on-year to $17.44 billion, while its net profit rose 271.3% from the year-ago quarter to $12.31. billions of dollars. Additionally, the company’s net cash flow from operating activities increased 142.7% year-over-year to $13.66 billion during the period.

RIO’s stock has gained 9.6% in price over the past three months and 17.8% over the past month.

RIO paid a quarterly dividend of $3.76 on September 23. While RIO’s four-year average dividend yield is 8.6%, the current dividend translates to a yield of 9.94%.

In non-GAAP forward P/E terms, RIO is currently trading at 5.27x, 65.8% below the industry average of 15.42x. Additionally, in terms of forward EV/EBITDA, the stock is currently trading at 3.31x, 59.1% below the industry average of 8.10x.

RIO’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system. RIO is also rated B for stability, value and quality. Within the Industrial – Metal industry, it is ranked #5.

In total, we rate RIO on eight distinct levels. Beyond what we’ve stated above, we’ve also assigned RIO ratings for Growth, Sentiment, and Momentum. Get all RIO notes here.


BHP shares fell $0.69 (-1.03%) in premarket trading on Friday. Year-to-date, BHP has gained 9.61%, versus a -3.01% rise in the benchmark S&P 500 over the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. Following…

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