But what’s behind this popularity? And will it continue?

Outperformer

To be clear, the mining colossus has been in favour for some time. Anyone buying at the 52-week low set back in late June 2025 will now be looking at a gain of about 80%!

Even those who only bought at the beginning of the year will probably be popping a few champagne corks.

As things stand, the £120bn-cap is walloping the index return. We’re talking about a gain of almost 24% compared to the top tier’s rise of 5%. This is before we’ve even taken into account the near-192p per share dividend received by holders exactly one week ago (16 April).

Although there’s no guarantee this will carry on, it clearly shows that Foolish investors have the ability to 1) beat the market and 2) don’t need to go fishing among highly-volatile penny stocks to do so.

What’s going on with Rio Tinto shares?

This wonderful momentum can partly be attributed to a lovely rise in the copper price. The red metal is a key part of the company’s portfolio and the recent growth in production has reduced Rio’s reliance on iron ore somewhat.

The numbers have also been encouraging. Back in February, the Anglo-Australian firm reported a 7% rise in revenue to $57.6bn. Underlying profit rose 9% to $25.4bn.

It’s not all been plain-sailing though. The outbreak of war between Iran and US back in March hit share prices across the board, including that of Rio Tinto. While we’ve seen a solid rebound in April, this does show how exposed the company is to geopolitical tensions and subsequent economic concerns.

The miner’s income credentials can also be questioned. The total dividend has been up and down over the years. Still, it could be argued that this is to be expected when investing in a company that has absolutely no say over the price of what it digs up. Moreover, the current forecast yield of 4.8% is more than would be received from a FTSE 100 tracker fund (roughly 3%).

At the time of writing, this year’s dividend also looks like it will be covered by expected profit. So there should be no need for managment to dip into cash reserves to fund it.

Still time to buy?

I’ve been bullish on Rio Tinto shares for some time now. Yes, the time to really load up was last year. But I still think they’re worth considering today, albeit within a diversified portfolio. A forecast price-to-earnings (P/E) ratio of 12 doesn’t feel excessive relative to the rest of the UK market. It’s also pretty reasonable (athough not cheap) among companies in the basic materials space.

But the biggest argument in favour of holding a slice of Rio surely has to be the long-term outlook. While share price movement in the near-term is hard to call, the company’s clearly looking towards the future and planning for the huge demand in metals to support the green energy revolution and ongoing rise of AI. This will include building one of the world’s largest copper mines in Arizona.

Bar any unforeseen disasters, recent gains might be just the start.

The post Why is everyone buying Rio Tinto shares? appeared first on The Motley Fool UK.

But how much would someone need to accumulate to aim for £1,500 every month (£18,000 a year) using the 4% ‘safe withdrawal’ rule?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Realistic goal

The answer to that question is £450,000. I know, that’s a huge number. But I reckon it’s achievable for someone willing to put their money to work in the stock market as early as possible and compound the value of what they own over time. Put £400 aside every month and — assuming an average annual return of 7% — our investor will have that massive pension pot in 30 years.

Now, I won’t shy away from the fact that this will all require a healthy dollop of discipline. But that’s always been the Foolish way. We invest for the long term. Think decades, not weeks, months or a year.

Then again, there’s no rule to say that an investor can’t target a higher average return and attempt to speed things up. To do this, they’ll need to take on more risk by owning a portfolio of individual company stocks. There’s no magic number but between 10 and 20 should give a good amount of diversification. This is important because there’s always a chance that a few in that group might seriously underperform.

Strong candidate

A company like Rio Tinto (LSE: RIO) could arguably make the cut. It’s one of the biggest miners around, digging up metals such as aluminium, lithium and copper from around the world. It’s also been pretty great source of dividends over time. Right now, the yield stands at 4.7% for the current financial year. That’s more than an investor would get from holding a FTSE 100 tracker fund (3%).

This is not to say that Rio is all about income. Far from it. The stock’s up almost 70% in the last 12 months off the back of strong earnings reports and rising commodity prices.

No sure thing

I rate Rio highly as a ‘buy and hold’ contender. But it’s far from a safe bet. Of course, no stock truly is. But the £120bn-cap makes its money from markets that are notoriously volatile. It has absolutely no say on the value of what it digs up. On top of this, mining is dangerous and unpredictable work.

For proof of just how tricky things can get, take a look at the behaviour of the share price in 2026 alone. At the beginning of the year, this stood at 6,000p, rising to almost 7,500p by the end of February. By mid-March, that gain was almost entirely wiped out as the USA-Iran war kicked off. It’s since recovered strongly.

Even so, the likely surge in demand for metals like copper over the next few decades as the world increasingly adopts clean energy, electric cars and other technologies suggests investors should at least consider having some exposure to companies like this.

Seen through this lens, any temporary drop might regarded as an opportunity to think about buying at a more attractive price.

The post How much does an investor need in an ISA to target £1,500 in monthly passive income? appeared first on The Motley Fool UK.

The surge was driven by a powerful rebound in iron ore prices and Rio’s ability to convert that into hefty cash flows for shareholders.

But despite this momentum, the shares still trade on modest earnings multiples. So, how much further has the rally left to run?

Key earnings drivers ahead

A risk for Rio going forward is its heavy capital investment programme. It means periods of lower free cash flow are possible as major projects move through construction and ramp‑up phases. Another is shifting demand through the commodities pricing cycle that may squeeze margins during bearish periods.

Nonetheless, analysts forecast medium-term growth of 8% a year, on average, which looks well supported by 2025 annual results.

Underlying EBITDA rose 9% year on year to $25.4bn (£19.2bn), underpinned by an 8% uplift in copper‑equivalent production and firmer cost discipline. Consolidated sales revenue increased 7% to $57.6bn, illustrating the contribution of higher copper and aluminium volumes alongside improving market premiums.

Net cash generated from operating activities rose 8% to $16.8bn, underlining its diversified portfolio and the early returns from major growth projects such as Oyu Tolgoi and Simandou.

Together, these drivers reinforce a clear route for sustained earnings growth ahead, in my view.

Share price gains in sight?

Comparisons of Rio’s key stock measures against its competitors suggest it remains undervalued.

For instance, its 15.4 price-to-earnings ratio is bottom of its peer group, which averages 36.5. These firms are BHP at 18.1, Vedanta at 19.5, Antofagasta at 34.4, and Griffin Mining at 74.1.

It also looks a bargain on its price-to-sales ratio of 2.7 compared to its competitors’ average of 4. And its price-to-book ratio of 2.5 against its peers’ average of 4.5 also looks cheap. 

On these metrics, Rio continues to trade at a clear discount to its peer group — a gap that looks increasingly hard to justify, in my view.

Rising dividend income?

Rio’s 402 US cents (304p) 2025 dividend gives a current yield of 4.1% — well above the present 3.1% FTSE 100 average. These returns can go up or down, depending on share price moves and changes in annual dividends, of course.

However, analysts forecast Rio’s dividend will rise to 355p this year, 356.5p next year, and 365.1p in 2028. These would generate respective yields of 4.8%, 4.9%, and 5%.

So, my £20,000 holding in the firm would make me £12,940 after 10 years and £69,355 after 30 years. This assumes the 5% forecast yield and the dividends being reinvested back into the stock to harness the power of dividend compounding. 

By the end of the 30 years, the total value of the holding would be £89,355 (including the original £20,000 investment). And this would make me an annual dividend income of £4,468.

My investment view

Given Rio’s strong fundamentals, huge cash generation, and valuations below its peers, I will buy more of the shares soon.

And I also have my eye on other undervalued stocks that pay even higher dividend yields.

For investors seeking dependable exposure to global commodities without paying premium multiples, I think Rio is well worth considering.

The post £20,000 invested in the FTSE’s Rio Tinto a year ago is now worth… appeared first on The Motley Fool UK.

With the financial year taking us through to 2027, let’s take a look at a thematic £2,027 monthly passive income goal. How much do we need in an ISA to reach that kind of income? And what stocks might be well-placed to take us there?

Drip-feeding

Let’s start by saying that £2,027 every month is nothing to sniff at. It’s a tax-free income higher than the pension and the minimum wage. And the amount required in a Stocks and Shares ISA (assuming we withdraw at 4% a year) is £608,100.

That’s crazy money, really. But here’s the thing. Generally folks don’t chuck in over half a million all at once. The money is drip-fed slowly over the years from a day job. This is actually better too because it allows investments to grow and the amount of cash to be stumped up far less. Most investors who end up with £600k in an ISA won’t have put in anywhere near that much.

How much? Well, over an investing timeline of 30 years and assuming 10% returns then that’s £294 a month. Assuming 8%? That’s £432 a month, and the lower the return rate, the more needs to be invested. There are no guarantees, of course. But the figures sounds a lot more reasonable, and could even be less with good investments.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

One to consider?

One area I’ve been keeping a close eye on lately is mining. The sector hasn’t performed too well of late, but I think there is a fair chance for a company like Rio Tinto (LSE: RIO) to outperform in the years ahead. That could make it a good stock for a Stocks and Shares ISA.

Why? Well, mining is a notoriously cyclical sector, which means booms and busts are par for the course. After a few fallow years, the Rio Tinto share price rising 30% in the last six months could be the start of a surge.

The company is pivoting towards green energy commodities like copper and lithium. As the world embraces cleaner energy sources like solar panels or wind turbines, these have a chance of being the metals of the future.

There are risks here too. The firm’s cash cow is iron ore, which brings in large sales from China and especially its construction sector. A slowdown in the Asian giant’s economy could make this a poor investment whatever the company itself is up to.

No one can ever predict ahead of time what a new financial year will bring. But if history is anything to go by, then there will be more than a few stocks that rip higher over the period. Perhaps Rio Tinto will be counted in their number.

The post How much do I need in a Stocks and Shares ISA to reach a £2,027 monthly passive income? appeared first on The Motley Fool UK.

Let’s look at three examples that are outpacing the FTSE 100 and might just continue doing so for the remainder of 2026.

Turnaround dividend stock

Despite Vodafone‘s (LSE: VOD) chequered history when it comes to distributing cash to its owners, investors have long gravitated towards the telecommunications behemoth for their dividend fix. But lately, this market juggernaut has been behaving almost like a growth stock! A 15% gain in 2026 compares favourably to the index’s 9% and adds to the super momentum seen in 2025.

Of course, the rise in its share price has reduced the dividend yield. Right now, this stands at 3.6% — fairly modest when other stocks in the FTSE 100 are yielding up to 8%. But it’s more than a bog standard index tracker would currently earn (2.9%).

After a tough few years, it looks like investors are warming to this company’s strategy of selling its non-core businesses and focusing more on growth markets. Indeed, the completion of its merger with Three UK last year seemed to mark an inflection point in sentiment.

My chief concern remains the massive debt load. Yes, it’s lower than a few years ago. But ongoing and fierce competition could make a substantial reduction unlikely for now.

Future proof

Also on a charge is mining giant Rio Tinto (LSE: RIO). Its shares have performed even better — rising over 20% since the start of January — helped by a surging copper price.

Despite this great performance, there have been a few volatile days in the mix. A couple of weeks ago, Rio’s price dropped as it posted flat annual earnings and missed analyst expectations due to weaker iron ore prices. This highlights the bumpy ride that all investors in commodities can expect.

Still, the likely huge demand for the red metal in the years ahead as the world migrates towards to cleaner energy sources surely bodes well for Rio as both a long-term income and growth play.

Again, the dividend yield isn’t quite what it was. But 4.6% is hardly bad. And although those cash distributions can never be guaranteed, they look set to be covered by expected profit.

Reliable income

Yielding 3.5%, power provider National Grid (LSE: NG.) completes our trio of income stocks doing well. Up 20% so far, this traditionally ‘boring business’ has now hit a record high.

Now, I’ve always regarded this as a potential cornerstone of any dividend-focused portfolio. In addition to regular-if-modest hikes to the total amount of cash returned, our constant need for gas and electricity makes this one of the most defensive businesses around.

It’s not a slam-dunk investment, though. Like Vodafone, the Grid has a huge debt pile, primarily due to the cost of maintaining its infrastructure. A price-to-earnings (P/E) ratio of 18 also makes National Grid shares the most expensive of the three.

As more money seems to be flooding into UK and European stocks from across the pond, however, I think the price might just continue going up.

The post These British dividend stocks have been flying in 2026. I think there could be more to come! appeared first on The Motley Fool UK.

With the largest FTSE 100 dividends sitting around 8% and the largest across the entire London Stock Exchange around 13%-15%, it looks like we’re going to need a different approach…

It’s no secret that one of the difference makers in investing is to see the cash invested grow. If we can invest in companies that build wealth in our ISA then it becomes much easier to hit passive income targets. And the £20,000 yearly cap is only on deposits; if the money grows to £30,000 then it’s still completely tax-free even though we’re over the limit.

Higher rewards?

An increasingly popular strategy nowadays is to put the money into index funds. By taking a FTSE 100 index fund, I get exposure to 100 companies all at once. And given the Footsie’s good performance in recent years, that £20k would have increased to £30k since 2021.

Investing in individual stocks is another strategy – with both higher risk and higher potential reward. A good individual stock to have owned recently is Lloyds Bank. After a terrific run, the share price has doubled, potentially turning that £20k into £40k inside a couple of years.

This has can lead to both very good and very bad outcomes. A stake in Rolls-Royce shares in recent years would be over 10 times in value. But the same stake in advertiser WPP would be down 65% in the last year.

To answer the question then: is £20,000 enough to earn £600 a month in an ISA? In the short term, no. With a few years and a few excellent investments, then yes – although there are always risks attached.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

One to consider

What kind of stocks could help us reach a second income target? Many of the best investments over the years are in oversold and unpopular industries due for a turnaround. This is why I’m keeping a close eye on FTSE 100 miners like Rio Tinto (LSE: RIO).

The shares in the £90bn mining giant have been stagnant since the pandemic, until recently showing signs of life. The share price is up 60% in around a year. And a price-to-earnings ratio of around 12 suggests it might be cheap still.

When a share price struggles, that can be a warning sign. In Rio Tinto’s case, the last few years have been dogged by inflationary pressures and a slowing down of the Chinese property market which uses its raw materials. Both could be risks going forward.

But I see the long term as being very bright. Many of the metals it digs up, like copper, cobalt, and iron are vital as countries around the world upgrade their infrastructure for the green revolution. I think it’s worth considering for those looking to build a second income in a Stocks and Shares ISA.

The post Is £20,000 enough in an ISA to earn a £600 monthly second income? appeared first on The Motley Fool UK.

CEO Simon Trott said: “Our strong cash flow and balance sheet enable us to sustain a 60% payout ratio with a $6.5bn ordinary dividend, making it the 10th consecutive year at the top end of the range.”

Rio Tinto sounds like a bit of a cash cow. The company started life in 1873 with the purchase of a mine on the river of the same name in Spain — a site that’s produced copper, silver and gold since antiquity. And since then, it’s been rewarding investors well — though with up-and-down spells in a very cyclical market.

Despite the CEO’s glowing words, Rio Tinto shares fell more than 3% in early trading. Let’s see why.

Bottom-line profit flat

Underlying EBITDA in 2025 rose 9% on the previous year. But free cash flow fell 28%, and profit after tax dipped 14%.

Underlying earnings per share didn’t budge. And while the total dividend payout might have been at the top end of hopes, per share it was unchanged.

It wasn’t a great year for iron ore, with the price dipping between December 2024 and a year later. And costs per tonne at Rio’s Pilbara operation rose. Against that, however, copper prices had a strong year, boosted by high demand from AI-led data centre expansion.

Overall, this is what we should expect if we buy shares in a miner or other commodities producer. Our profits will rise and fall along with world prices for the stuff they produce. I don’t see any underlying problem with the company here — it’s just been doing what it should do, for one more in a long line of years.

What next?

I see some factors very much in Rio’s favour. But some things count against it too. I like the global focus — if the US wants to slap tariffs on metal imports, China is only to happy to keep on buying. Still, even with a global outlook, there’s a fair bit of dependency on the world’s two largest economies — and both can be politically uncertain.

Also, short-term metals and minerals prices can fluctuate fairly wildly. And that means some years of falling prices, and therefore profits, are almost certain.

Forecasters do have earnings and dividend growth on the cards over the next few years. The thing is, that could be upended in the short term if commodities markets turn down. And having a company’s income so dependent on factors outside of its control is always a risk.

A cash cow, or not?

I think investors looking at recent share price rises and hoping for gains though 2026 should possibly consider other opportunities. There’s too much scope for short-term volatility for my money.

But for those who see a long-term cash stream — following a 4% dividend yield for 2025, covered 1.7 times by underlying earnings? I very much rate Rio Tinto shares as an investment to consider for the decades ahead.

The post Can Rio Tinto shares climb further after top-end cash payout for 2025? appeared first on The Motley Fool UK.

With many believing that more economic bad weather might be forming on the horizon, is the FTSE 100 at the start of a long bull run? And what stocks might boom over the coming years?

In the pocket

If I had to sum up the state of the FTSE 100 in just a few words, I’d probably go with high dividends, globally diversified, low valuations, and ‘old economy’ sectors. Each of the four characteristics is something of a double-edged sword.

The high dividends are terrific for those who prefer the cash in the pocket. But using the cash for investing in the company or buybacks can be better for share price growth.

Its global reach makes it less subject to any issues localised to the UK. But it does mean a lot of focus is on big economies like the US and China.

Low valuations like the price-to-earnings ratio are signs that companies are undervalued, but they are also signs of poor growth prospects.

And the more traditional sectors like defence, banking, and mining are not going anywhere. But a lack of focus on tech has been a real hindrance in recent years – and the primary reason why the S&P 500 has been superior for the last decade.

Taken altogether, there’s plenty of reason to think the last 10 years of weak performance could be a blip rather than the norm.

Resurgence

What if the FTSE 100 keeps beating the S&P 500? What stocks might be leading the vanguard? I think miners like Rio Tinto (LSE: RIO) are worth consideration in this regard. We’re already seeing a resurgence in the sector and I can see it continuing.

The stock pays a solid dividend of 3.95%. The share price is up 43% in the last year. And a price-to-earnings ratio of 13 is below the index average.

Demand looks like it should be strong in the medium term too. Rio Tinto’s metals and minerals like aluminium, lithium, and copper are all key metals in the manufacture of low carbon energy. Its biggest product of iron ore is vital in electricity infrastructure too.

A risk is that the firm’s health is tied to the global economy. If a downturn comes then there would be less demand for its raw materials.

It remains to be seen just how long-lasting this FTSE 100 golden spell will be. But I see no reason why the properties of Footsie stocks like Rio Tinto will not remain valuable to investors in the years to come.

The post Why does the FTSE 100 keep outperforming the S&P 500? appeared first on The Motley Fool UK.

In other words, most British income stock investors have missed out on some substantial gains. However, that all changed in 2025, when the FTSE UK Dividend+ index charged ahead by a massive 33% versus the FTSE 350’s 24.2%.

So with dividend stocks now roaring back into life, are investors looking at a once-in-a-decade chance to lock in phenomenal long-term passive income?

Surging passive income

As a market-cap-weighted index, roughly 23% of last year’s gains came from its top-five constituents:

• Rio Tinto (LSE:RIO)
• Legal & General
• HSBC Holdings
• NatWest Group
• British American Tobacco

Since the mining and financial sectors vastly outperformed last year, it isn’t surprising the dividend index did as well when looking at this list. And as 2026 progresses, these stocks continue to drive the bulk of returns. But can the giants outperform again?

Looking at the macroeconomic environment, there’s room for optimism. Rising commodity prices are serving as a powerful tailwind for Rio Tinto.

Meanwhile, structural hedges and robust demand within the pension risk transfer markets bode well for the financial stocks on this list. And even British American Tobacco’s getting a little boost from the regulatory intervention against single-use vapes, driving up demand for its own non-combustible brands.

But with any stock, it’s critical to look at each underlying business. After all, even with favourable macroeconomics, structural operational issues can still lead to lacklustre results. So let’s take a closer look at the biggest company on this list.

Is Rio Tinto a good investment in 2026?

One of the biggest headlines within the mining sector this year is the proposed merger of Rio Tinto and Glencore.

If successful, the deal would instantly provide Rio Tinto with new copper assets to capitalise on the electrification trends of global infrastructure while making it the largest diversified mining enterprise worldwide. And it would nicely complement its existing portfolio of iron, aluminium, and lithium projects.

Providing that commodity prices don’t suddenly drop off a cliff (which has happened in the past), this surge in production capacity could pave the way for substantially higher dividends moving forward.

Of course, that’s not guaranteed. Given the size of these businesses, regulators from multiple jurisdictions will undoubtedly demand concessions. And that could translate into forced asset sales, with some analysts already anticipating necessary divestments in China.

Even if that doesn’t happen, mergers of this size are enormously complicated and will most likely encounter unforeseen challenges. That could translate into a sharp rise in one-time expenses that might actually pressure dividends instead of supporting them.

Nevertheless, with an experienced management team at the helm, and the mining sector seemingly well-positioned for a cyclical rebound, Rio Tinto shares could be worth investigating further.

And with more tailwinds supporting the other UK income stocks in the FTSE Dividend+ index, 2026 could be another phenomenal year for dividend investors.

The post British income stocks: a once-in-a-decade chance to get richer? appeared first on The Motley Fool UK.

Reasons for the move

Recent reports suggest Rio Tinto is exploring a potential acquisition or merger with Glencore that could create one of the largest mining giants globally. Earlier this month, Rio Tinto put out a statement saying that “Rio Tinto and Glencore have been engaging in preliminary discussions about a possible combination of some or all of their businesses”.

Of course, it’s early days, with a deal this size taking months to get things moving. But it’s clear there’s intent on both sides to make something happen, which has naturally driven a spike in interest in the Glencore share price.

Another factor helping the business in recent weeks is the move in key commodity markets. Base metals have surged in January, particularly copper. Glencore has large exposure to copper and other metals, including gold and silver. The rise in raw material prices, it means the business can benefit from selling at higher prices. This should translate into higher profits.

The direction from here

I’m very much in the camp that certain metals, such as gold and silver, are in a long-term move higher. There are plenty of reasons that support a continued price increase. These include lower interest rates globally, continued geopolitical uncertainty and higher industrial demand (particularly relating to silver and copper).

As a result, I think commodity stocks like Glencore could do well as the business grows profits amid elevated commodity prices. This really works in its favour due to operational leverage. This refers to how revenue can increase faster than costs. For example, gold prices could jump 10% tomorrow, but the cost of production hasn’t changed. This is why companies like Glencore do very well during boom periods for raw materials.

The merger with Rio Tinto is definitely something that will dominate conversations in the coming months. If things proceed, there’s the risk that Glencore gets delisted, with the combined company trading under the Rio Tinto brand. Ultimately, this could make any investment in Glencore short-lived, which is something that needs to be noted. Another risk is that if the deal falls apart or gets messy, Glencore shares could slump as optimism quickly fades.

Therefore, although the strong performance over the past month is partly due to fundamentals, I’m cautious about buying now given the uncertainty around the Rio Tinto deal. I’d prefer to consider other commodity stocks that aren’t in merger talks for a cleaner investment opportunity.

The post The Glencore share price is up 23% in a month! What’s going on? appeared first on The Motley Fool UK.