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Vedanta Resources Hikes Dividend By 6% to Yield 3%

LONDON -- The shares of Vedanta  (LSE: VED  ) jumped 2% to 1,280 pence during early London trade this morning after the Indian mining giant revealed record annual production of zinc-lead, silver, oil and gas.

The company's full-year revenues advanced 7% to $15 billion, driven by a 19% uplift in oil and gas production. This segment was boosted by Vedanta's 2011 acquisition of Cairn India, and a 32% recovery in output at the company's Rajasthan block.

Vedanta reported a 39% increase in cash generated from operations to almost $5 billion, with free cash flow of $1.5 billion.

Reflecting this rise in profits, the company proposed a 6% increase in its final dividend, bringing Vedanta's total annual payout to $0.58 per share.

Vedanta's founder and long-standing Chairman Anil Agarwal added:

Vedanta has once again delivered a strong performance. Operationally, the group has seen great success, with oil and gas production up 19%, exploration recommencing in Rajasthan, and a successful discovery at the block in April.

The group also achieved strong growth across copper, aluminum, lead and sliver, maintaining our position as a large global diversified natural resources company. We delivered positive free cash flow of $1.5 billion after growth capex, and have maintained progressive dividends.

With a market cap of £3.4 billion, Vedanta's shares trade at 17 times expected earnings. After today's dividend hike, the shares offer a trailing dividend yield of around 3%.

Of course, whether that valuation, today's results and the future prospects for the outsourcing industry all combine to make shares of Vedanta a 'buy' remains your decision.

However, if you're looking for a higher-yielding investment opportunity, you may want to look at "The Motley Fool's Top Income Stock For 2013."

In fact, the Fool's choice recently revealed its dividend would increase "at least in line with the rate of U.K. inflation for the foreseeable future", and provides a market-beating 5% yield.

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9/27/2016 4:27 AM
VED $555.00 Down -5.50 -0.98%
Vedanta Resources CAPS Rating: No stars