Hike while the iron is hot

9 February 2012 By Kevin Allison

The miner’s 34 pct dividend hike is the latest sop to investors after the disastrous Alcan deal of 2007. Rio can afford it for now. But with capex and cost pressures increasing, Rio needs the super-cycle to continue. Sticking with share buybacks would have maintained flexibility.

This content is for Subscribers only

Context News

Rio Tinto announced a 34 percent increase to its full-year dividend on Feb. 9. The higher payout came as the miner took an $8.9 billion write-down on its struggling aluminium business. Rio did not expand its existing $7 billion share buyback, due to be completed this quarter.
The dividend increase was higher than most analysts expected, and followed a year of higher prices and record volumes for iron ore. But it failed to prevent a slide in Rio’s share price as the aluminium write-down hit earnings, leading Chief Executive Tom Albanese and Finance Director Guy Elliott to forego their 2011 bonuses.
Rio’s shares fell as much as 2.7 percent in London before recovering to trade down just under 1 percent by midday.

Email a friend

Please complete the form below.

Required fields *