ASX Mining Stocks: Why Rio Tinto (ASX RIO)?
Stocks are priced on a combination of sentiment and fundamentals. Buying when sentiment is low means that you benefit when the fundamentals improve.
This is the basis of the value philosophy and why some of the stocks we cover this week, AGL Energy (AGL), CSR Limited (CSR) and James Hardie Industries (JHX) have been shooting the lights out, offsetting recent underperformers like the big ASX banks and the big ASX resources stocks.
If you were to look back six months ago, the banks and the resource companies were returning big numbers.
Nobody gets market timing right, unless by pure luck. Looking for stocks where expectations are low remains the best way to make money over the long term.
Our Outperformance is Clear
We will be covering our ASX Blue Chip Portfolio next issue. The short-term numbers for 1 month, 3 months and six months are comparable, but over 2 years the outperformance is clear.
We’ve returned close to 8% a year versus the benchmark S&P/ASX 200 Index’s 6%.
What you’re looking for now are stocks on the Australian share market that have resilience, but the share price is low. In Blue Chips, you are looking for dividends to reduce your risk and you’re looking for stocks that can grow earnings in difficult economic conditions.
To super charge your returns you need Small Caps. That’s right, Blue Chips are there to provide ballast, which means you’re looking to purchase when there is uncertainty.
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Why Resources in Australia remains an interesting market sector?
The most interesting sector in Australia to me remains resources, at the big end.
Size, or “scale” is not everything in mining, but it comes very close. The likes of Rio Tinto Limited (ASX:RIO) and BHP Group (ASX:BHP) are able to increase production and grow profits even when commodities prices fall, simply because their size means that their unit costs are much lower than the competition.
Market data: Key returns
Rio Tinto in particular looks good value, with an expected return of 18%.
Is Rio a Buy right now?
Rio Tinto has fallen - it's share price has dropped 18% this year on fears of slowing Chinese growth. This makes it look good value for ASX investors.
Rio Tinto forecast dividend yield
Rio Tinto now trades on a forecast dividend yield of 7%, which we believe will grow in the future.
ASX Mining Sector
Commodities and other minerals are off their peak prices, but this is a sector which has not had the volume of investment in project development or exploration that we have seen in the past.
Supply & Demand
The big driver is inadequate supply, combined with growing demand for raw materials that is a function of countries across the world moving to secure their sovereign interests as international order breaks down.
Rio Tinto and other big miners are now paying more dividends than ever in an effort to regain investor trust that was lost in the lead up to the financial crisis of 2008-11. Remember, Rio Tino went close to going broke buying Alcan in late 2007.
Read more about ASX mining stocks, including aluminium, gold, copper, lithium and other metals here.
Buy while the share price is low
The bigger point is that you need to be buying some stocks where the share price isn't so well now, because they’re the ASX stocks that will deliver the returns of the future.
Fundamentals win in the end.
The key is always not paying too much. This gives you the chance to invest in Small Caps, which can you the big returns that your investing needs.
"What you’re looking for now are stocks that have resilience, but you’re not paying too much.
In Blue Chips, you are looking for dividends to reduce your risk and you’re looking for stocks that can grow earnings in difficult economic conditions. To super charge your returns you need Small Caps. That’s right, Blue Chips are there to provide ballast, which means you’re looking to purchase when there is uncertainty."
Read our report to get the full information on Shares to buy now and our expert analysis on Rio Tinto limited.
Key statistics for Rio Tinto limited
Rio tinto's share price has ranged from $87.60-$128.78 in the last 52 weeks. Rio Tinto's market cap is $159BN AUD.
About Rio Tinto Ltd
Rio Tinto was founded in 1872. It is an Anglo_Australian multinational company that is the world's second-largest metals and mining corporation.
Rio Tinto is a leading global mining group that focuses on finding, mining and processing the Earth's mineral resources. The current CEO is Jakob Stausholm.
Year To Date Return
How much does Rio pay in dividends?
Rio Tinto pays dividends to all shareholders. Upcoming dividends for Rio Tinto Limited (RIO) are announced to the ASX several weeks before the ex-dividend date. Rio's dividend history is consistent and it pays 100% franked shares.
How often does Rio Tinto pay a dividend?
Rio Tinto pays ASX shareholders a dividend in September and April each year. In March 2023 they paid a fully franked dividend of $3.26 per share. In August 2022 it paid $3.837 per share. This was a dividend yield of 6.35%
Rio Tino's directors must report any change in shareholding to the ASX within 5 business days. They must report any buy, transfer or sell of shares whether they are on market trade or off market transfer or a dividend reinvestment plan. It's head office is in Victoria. For a full listing, see the ASX.
Rio Tinto Ltd (ASX: RIO) Latest News
Our analyst team reviews the latest financial news & performance to you don't have to.
We review the annual results and each annual report and the quarterly operations reviews include all of Rio Tinto's ASX announcements.
Top 10 Shareholders
The top shareholders include Fisher Asset Management LLC which holds a 1.17% stake, Wellington Management Co. LLP which holds 1.11%, State Farm Investment Management hold 0.87%, Capital Research & Management 0.68%, Neuberger berman Investment Advisor 0.61%. Franklin Advisers 0.51%, Arrowstreet Capital LP 0.43%, Goldman Sachs Asset Management 0.22%, Arcadian Asset Management 0.2%, Harding Loevner 0.2%.
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