Petrobras and Vale set a record by paying dividends of R$136 billion

The giants Petrobras (PETR3; PETR4) and Vale (VALE3) will be the two largest profit distributors in the Brazilian market, with record dividend payments to their shareholders in 2021, shows a survey by consulting firm Economatica at the request of Estadão/Broadcast. The payments, which should add up to at least R$ 136.4 billion in 2021, will be distributed to more than 1 million shareholders – 850,000 of which from the state-owned company and almost 300,000 from the mining company.

In the case of Petrobras, the big “awarded” is the government itself. Among amounts already paid by the company and forecast until December, of R$ 63.4 billion, R$ 23.3 billion must be paid to the Federal Government (including the BNDES share). Another around 850,000 shareholders, 750,000 of which in Brazil, will receive R$ 40.1 billion.

Vale, in turn, has 291,000 individual shareholders, 2,600 legal entities and 2,200 institutional shareholders, such as pension funds.

Investors who invest directly in shares receive the dividend via deposit in the broker’s account. Currently, income related to dividends does not pay Income Tax (IR) in the country.

The survey shows that Vale distributed BRL 73 billion until September, the highest value among companies listed on B3, the Brazilian stock exchange. Petrobras appears in second place in the ranking, with payment of R$ 31.6 billion in 2021 until September, an amount that will double by December. Bradesco (BBDC3;BBDC4) is in third place, with R$ 9 billion, followed by Santander Brasil (SANB11), Itaú Unibanco (ITUB4) and Banco do Brasil (BBAS3).

Cycle

The numbers reflect a soaring commodity price phase, which resulted in strong cash generation. In the case of Petrobras, a barrel of Brent oil is around US$ 80, the highest level in eight years. The high cash flow is also a reflection of the fuel price policy, which generated criticism from President Jair Bolsonaro, who sees distributed profits as “absurd”.

Iron ore, on the other hand, reached US$ 230 a ton in May, a record, before starting to fall in the face of uncertainties about China.

“Vale generates a lot of cash and does not experience a large investment cycle. Debt is low, close to zero. And, even with the obligations for Mariana and Brumadinho (repair for the disasters), the expanded debt is below the target of US$ 15 billion”, says Daniel Sasson, analyst at Itaú BBA.

In November, Vale is present in four of eight portfolios of good dividend-paying stocks recommended by stock brokers, according to E-Investidor, the personal finance service of the state. At Petrobras, the decision to focus on investors took place in 2016 and has been gaining momentum. The company determined that, after reducing its gross debt to $60 billion, it would return 60% of its free cash flow to shareholders. That goal was met in the third quarter.