Rio Tinto shares (LON: RIO) operate via a dual-listed structure, with the businesses of Rio Tinto plc, quoted on the London Stock Exchange, and Rio Tinto Limited, quoted on the Australian Stock Exchange. However, they are managed as one company with a single board of directors.
Rio Tinto is a mining and materials company. Since its establishment, the company has strategically expanded its operations, solidifying its presence on an international scale.
Rio Tinto has achieved success in catering to diverse market segments. The company’s core strategy revolves around its extensive portfolio of mining projects and products, which meet the various demands across different commodity categories, with interests including ventures in aluminium, copper, diamonds, and more.
YOUR CAPITAL IS AT RISK
Rio Tinto EPS and Revenue Breakdown 2020-2023
| Rio Tinto | Annual EPS | Annual Revenue |
|---|---|---|
| 2020 | $6.00 | $44.61 billion |
| 2021 | $12.95 | $63.50 billion |
| 2022 | $7.62 | $55.55 billion |
| 2023 | $6.17 | $54.04 billion |
Rio Tinto has a rich history dating back to its founding in 1873 in London, following the acquisition of the Rio Tinto mines in Spain. Since its establishment, the company has been operating in 35 countries, producing a diverse range of materials, including iron ore, copper, aluminium, and more. Most of the company’s mining assets are in Australia and North America. However, it also has operations in Europe, Asia, Africa, and Central and South America.
Mining Industry Comparison
In 1995, The RTZ Corporation PLC merged with ConZinc RioTinto of Australia Ltd (CRA) to form RTZ-CRA, subsequently changing their names to Rio Tinto plc and Rio Tinto Limited in 1997. This merger resulted in a significant period of expansion for the company.
With operations spanning across continents, Rio Tinto now has a workforce of over 57,000 employees and operates in 35 countries.
Rio Tinto Share Price & Dividend
After a strong run higher between 2016 and 2021 (there was, of course, a large dip at the start of the COVID pandemic), RIO shares have ranged, although that range, on the daily chart, is narrowing.
The run over the last few years is not ideal for shareholders. However, Rio Tinto also pays dividends, meaning stockholders will get some sort of return for holding the shares. The company’s current dividend yield (mid 2024) is 6.75%.
Rio Tinto Price Forecast
In March 2024, Liberum analyst Ben Davis downgraded shares of Rio Tinto to Neutral from Buy with a 4,570p price target. In a research note, Davis told investors that following a “tactical upgrade” in November due to short-term iron ore bullishness, they have decided to downgrade Rio Tinto as its restocking indicator “falls to a Hold signal and other seasonal kicks, such as Australia/Brazil supply disruption, fail to materialize.”
Meanwhile, in November 2023, Goldman Sachs analyst Matt Greene started covering Rio Tinto shares with a Buy rating and a 7,300p price target. Greene said in his research note that Rio Tinto, alongside Glencore, shows the strongest balance sheets. The firm also noted that both companies have strong cash flows with the most valuation upside in the European metals and mining group. Goldman, which at the time said it was positive on copper and aluminium, believes Rio Tinto has the best near-term production growth in both commodities.
Our View: For dividend-focused investors, shares of the mining giant certainly represent an attractive opportunity. However, its recent lack of share price upside may be something to consider. Investors also may want to assess the current situation in the Chinese economy as demand for iron ore in the region can provide a lift to Rio Tinto.
Who Should Buy Rio Tinto Shares
The question of “Should I buy Rio Tinto shares” is difficult to answer as there are various factors to consider. Many of these factors will be based on your personal circumstances and characteristics. For example, risk tolerance, volatility, regulation, and economic conditions are aspects to assess.
Rio Tinto operates in the mining and metals industry, which is subject to market fluctuations, commodity price volatility, and regulatory changes. Investors should be prepared to assess and tolerate these inherent risks associated with the industry.
Furthermore, investors with a focus on dividend income might find Rio Tinto shares appealing. The company has a track record of offering competitive dividend payouts, providing potential income opportunities for income-oriented investors. Its current dividend yield is very attractive.
Given the current share price movement, investors comfortable with a slightly longer-term view may be more suited to purchasing Rio Tinto shares. In addition, those seeing a long-term opportunity in the sector or a specific commodity the company mines may also want to look further into the company.
Geopolitical conditions should also be assessed. For example, economic growth in China can play a significant factor in Rio Tinto’s performance, as positive economic conditions in the country can lead to more demand for the company’s products, especially when it comes to iron ore.
