Rio Tinto plc Boosts Dividend On Return To Profit

Rio Tinto plcs (LON:RIO) returns to profit after last year’s first loss in 18 years.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

mine siteThe share price of Rio Tinto (LSE: RIO) (NYSE: RIO.US) was broadly flat during early trading this morning, losing 0.5% to 3,488p, despite the miner announcing an increase in underlying earnings by 10% to £6bn, after higher iron ore prices and cost cutting helped turn around fortunes. The stock has dropped 6% over the last 12 months.

The London-based company exceeded or met all targets, adding that it is on track to cut nearly £2bn of operating costs this year, while the balance sheet has been strengthened by a 26% reduction in capital spending. Net debt reduced by £3bn to nearly £11bn and further efficiencies are a priority in the year ahead.

The world’s second largest miner saw cash flow boosted 22% to £13bn, which enabled the firm to increase its full year dividend by 15%. As such, it views the growth of the business as sustainable.

The chief executive, Sam Walsh, commented:

“These strong results reflect the progress we are making to transform our business and demonstrate how we are fulfilling our commitments to improve performance, strengthen the balance sheet and deliver greater value for shareholders.

“We have achieved underlying earnings of $10.2 billion, exceeded our cost reduction targets and set production records. In turn, this has enhanced our cash flow generation and lowered net debt. The 15 per cent increase in our dividend reflects our confidence in the business and its attractive prospects.”

Rio Tinto reported earnings per share of 332p, which will fund a dividend of 115p. After this morning’s price reaction the shares may therefore trade on a P/E of 11 and offer a possible income of 3.3%.

The decision to ‘buy’ — based on those ratings, todays results and the wider prospects for the mining sector — is, of course, entirely your decision.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Mark does not own shares in Rio Tinto.

(Photograph by Nevada Tumbleweed on Flickr.)

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »