Iron stocks may not get a lot of attention among investors these days, but iron mining and processing is still a huge industry. After all, iron is a primary ingredient in steel, a key component of much of the world’s infrastructure, including apartment buildings, office towers, bridges and tunnels, as well as machines such as cars, washing machines, and even cargo ships.
With commodity prices booming because of supply chain shortages and other challenges from the COVID-19 pandemic, you may be wondering if now is a good time to buy iron stocks. Keep reading below to learn more about iron mining stocks and which ones to invest in today. Image source: Getty Images. Top iron stocks
Most iron mining companies are not pure-play iron stocks. They mine other industrial metals such as copper, and many have downstream operations, including smelting and even steel production. With that in mind, let’s take a look at some of the metal stocks that play a role in the iron stock market. Description ArcelorMittal ( NYSE:MT ) $26.3 billion Integrated iron mining company and producer of specialized steel products, including rolled sheets, galvanized coils, rails, and wire products. Cleveland-Cliffs ( NYSE:CLF ) $13.4 billion The oldest and largest iron ore mining company in the U.S. has five mines in Michigan and Minnesota. It also produces steel products including flat-rolled steel and carbon steel. 1. BHP Group
If large and diverse is what you’re looking for from your iron stocks, you can’t beat BHP Group. With operations in steel-making commodities such as iron and metallurgical coal and high-tech base metals such as copper and nickel, BHP has a lot of growth levers to pull.
In fiscal 2021, it produced 253.3 million tons of iron ore used for infrastructure and manufacturing, making it one of the biggest global iron ore producers. The company says it’s the lowest-cost major iron ore company in the world, giving it a competitive advantage since it can earn a wider margin than its peers. Like most materials companies, BHP benefited from a surge in commodity prices during the pandemic as revenue jumped 42% in fiscal 2021 to $60.8 billion, and net income surged 42% to $11.3 billion. BHP’s dividend fluctuates according to performance, but the stock currently offers a generous 10.1% yield. That’s likely to fall if commodities prices decline. 2. Rio Tinto
Like BHP, Rio Tinto is a large, diverse company that focuses exclusively on mining metals and minerals such as diamonds. Iron ore made up almost two-thirds of the company’s $63.5 billion in sales in 2021, driving a 42% overall increase in revenue.
In iron ore, volume fell slightly from 333.4 million tons to 319.7 million tons, but iron revenue rose from $27.5 billion to $39.6 billion, thanks to higher prices for the key steel input. Underlying EBITDA in the segment jumped almost 50% to $27.6 billion, showing how profitable those operations are (at least before backing out depreciation, which tends to be an expensive line item for mining companies).
Current management is focused on recovering from the 2020 scandal when it blasted a 4,000-year-old aboriginal site in Australia, but business performance has helped the stock. Rio Tinto is also an attractive dividend stock , offering a dividend yield of 11.2%. 3. Vale
If you’re looking for a pure-play iron mining stock, Vale is about the best you’re going to do. In 2021, 85% of its revenue came from ferrous minerals or iron-based metals, most of which was iron ore. Copper and nickel made up most of the remainder of its revenue.
Similar to its peers, Vale benefited from rising commodity prices, with revenue increasing 38% to $54.5 billion in 2021. Operating income more than doubled from the previous year to $27.7 billion as gross margin surged due to higher commodity prices.
Vale has sharpened its focus on safety after its Brumadinho dam in Brazil collapsed in 2019, killing 270 people. The disaster led to financial, legal, and reputational damage for Vale, and senior managers in charge of the dam were arrested. As a result, the company is decommissioning 30 dams and aiming for zero high-risk injuries by 2025.
Like the other large miners, Vale is also a dividend powerhouse and currently offers a yield of 13.6%. 4. Anglo American
Anglo American is a diversified miner with four business segments: diamonds; base metals, including copper and nickel; platinum and related metals; and bulk metals such as iron ore.
In 2021, bulk metals was its most profitable segment, with $8.1 billion in EBITDA out of a total of […]
Protected by Patchstack