To be clear, MarketScreener is not suddenly becoming an enthusiastic promoter of large Brazilian groups controlled by the socialist, Bolivarian-Chavista government of Luiz Inácio Lula da Silva—as the article "Petrobras' stratospheric dividend yield reflects investors' extreme mistrust...", published yesterday morning in these same columns, might suggest, in addition to this article.

However, Vale's case is interesting in several respects, which is why it is included here. Although Brasilia's control over the group is officially less extensive than in Petrobras, in practice the government retains very strong decision-making and veto powers, both through its stake in the capital and the preferential nature of its shares.

In the absence of capital appreciation for foreign investors, who have suffered from the ongoing depreciation of the real against the dollar and the euro, Vale at least offers an attractive dividend yield, albeit less lucrative than that of Petrobras.

The figures are intriguing: the mining group has a market capitalization of $40bn and an enterprise value of $55bn, while generating cumulative free cash flow of $69bn over the last decade.

Over the cycle, it has returned $38bn in dividends and $15bn in share buybacks. Similarly, the number of shares outstanding has been reduced by a fifth and net debt halved, all signs of sound management.

Elsewhere, these characteristics would earn Vale top-tier valuation multiples. However, the proactive role that Lula's government intends to play in managing the country's large industrial groups, as well as its control over Brazil's central bank and monetary policy, naturally make international investors fear the worst.