Why Wall Street’s Bullish on This 14%-Yielder
August 6, 2025
VALE Stock Could Have 56% Upside Potential
One overlooked sector that has been performing well in 2025 is basic materials, rising 13.1%. This is slightly more than the red-hot technology sector, which is up 13% in 2025. Only two other sectors are performing better this year: industrials, up 14.1%, and financial, up 13.3%.
Materials might not sound like an exciting place to look, but without basic materials, we wouldn’t really have anything. As the first stage in the supply chain, this sector’s made up of the basic materials that create finished goods.
The materials sector essentially consists of companies engaged in the discovery, extraction, and processing of raw materials. This includes mining, forestry, and chemical production.
One great basic materials stock worth putting on one’s radar is leading metals and mining play, Vale SA (NYSE:VALE).
Based in Rio de Janeiro, Brazil, Vale is an industry juggernaut, with a market cap of $42.3 billion.
It’s one of the world’s biggest miners of iron ore, nickel, and copper, ingredients in the production of steel and lithium batteries and other widely used applications. Other metals mined by Vale include gold, silver, and cobalt. The company has extensive operations in Brazil, Oman, Canada, China, and Indonesia. (Source: “What we do,” Vale SA, last accessed July 27, 2025.)
Vale is also engaged in greenfield mineral exploration in five countries and operates logistics systems in Brazil and other regions in the world, including railroads, maritime terminals, and ports.
Sales Performance Improves Across All Business Segments
Vale SA has increased its revenue significantly since the 2020 health crisis, from $39.5 billion to a record $54.5 billion in 2021. Revenues have been down over the last few years, hitting $38.0 billion in 2024.
Wall Street anticipates that 2025 revenue will slip slightly to $37.2 billion, but there is also a high estimate of $44.1 billion. In 2026, revenues are projected to climb to $38.8 billion.
The company is off to a decent start in 2025. In the first quarter, Vale is experiencing good momentum with cost management and sales performance improving across all business segments. Iron ore sales were up four percent, copper sales increased by seven percent, and nickel sales jumped by 18%. (Source: “Vale’s Performance in 1Q25,” Vale SA, April 2, 2025.)
Vale’s total first-quarter net operating revenue came in at $8.1 billion. First-quarter net income was $1.39 billion, with recurring free cash flow of $504.0 million. The company’s adjusted operating income was down at $2.41 billion with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) coming in at $3.12 billion.
Vale ended the first quarter with cash and cash equivalents of around $3.96 billion, up from $3.79 billion at the end of fiscal 2024.
Vale SA Offers Quarterly Dividend of $0.37/Share
Thanks to its robust free cash flow, Vale is able to provide shareholders with a big dividend. It should be noted that its policy is to pay out 30% of EBITDA minus current investments. As a result, its payout will fluctuate. Vale also pays out a semi-annual dividend.
In March, the company paid a dividend of $0.37 per share, or $1.38 per share on an annual basis, for a forward dividend yield of 14%. It should pay its next dividend in the back half of 2025.
What will that dividend look like?
Vale’s mining operations are impacted by steel’s global supply and demand, primarily, from the Asian market—China, in particular. A recovery in the Chinese economy and the hoped-for trade deal with the U.S. could result in increased demand. Advances in renewable energy and advanced technology are also important growth drivers from China. All of this should benefit Vale and its dividend.
Does VALE Stock Have 56% Upside?
Again, VALE stock is reliant on supply and demand for commodities like iron ore. There’s more to Vale than just iron ore of course. The company has diversified its operations over the years, which allows it to remain profitable and maintain a high dividend payout even when iron ore prices are depressed.
As for VALE stock, thanks to solid fundamentals and a big global footprint, it has performed well in 2025. It has risen three percent over the last three months, 13.5% over the last six months, and 16% year to date.
These are solid gains, but Wall Street is expecting bigger gains over the coming quarter, with analysts providing a 12-month share price target range of $12.12 to $15.50. This points to potential upside with VALE stock of approximately 22% to 56%.
Should VALE stock hit $15.50, this would put it at its highest trading range since 2022.
Chart courtesy of StockCharts.com
The Lowdown on Vale SA
Vale SA is a basic materials giant with diversified operations and a big global footprint. It’s reporting solid financial results, and could do even better once the global economy improves.
Stronger results should, of course, lead to higher profitability and free cash flow, which ought to result in higher dividend payouts.
That’s probably what 661 institutional holders are hoping for. Accounting for a modest 17.1% of all outstanding shares, three of the biggest holders include FMR LLC, BlackRock Inc, and Morgan Stanley. (Source: “Vale S.A. (VALE),” Yahoo! Finance, last accessed July 27, 2025.)
