Commodities are an excellent place to look for investment ideas in this economy, suggests Tim Plaehn, editor of The Dividend Hunter — and a participant in The MoneyShow Las Vegas on May 9-11.

Rio Tinto (RIO) was founded in 1873 by a British-European investor group that purchased the Rio Tinto mine in Spain. The new company introduced new copper mining techniques, and from there, Rio Tinto grew into the world’s largest copper mining company.

In December 2021, the company announced a binding agreement to acquire the large, undeveloped Rincon lithium brine project in Argentina.


For 2021, Rio Tinto reported record results. Underlying EBITDA of $37.7 billion was up 58% over 2020. Underlying earnings were up 72%, and net earnings climbed by 116%.

2021 free cash flow totaled $17.7 billion, of which $16.8 billion was paid out as dividends. The gains were driven by higher commodity prices, with the price of iron ore up 48%, aluminum up 46%, and copper up by 50%.

Annual operating and free cash flow have been in a yearly uptrend since 2015.

Rio Tinto shares trade on the London Stock Exchange, the Australian Stock Exchange, and as American Depository Receipts (ADRs) on the New York Stock Exchange.

Rio Tinto declares all dividends in U.S. dollars. Investors in the U.K. and Australia can elect to be paid in the local currency. An interim ordinary dividend is paid in September, and a final ordinary dividend is paid in April based on full-year results.

The board expects total cash returns to shareholders over the longer term to be in a range of 40 to 60 percent of underlying earnings in aggregate through the cycle.

Since 2018 the company has added a special dividend amount along with some of the ordinary dividend payments. Here are the dividend payments since 2014. Note that the dates are written in day/month/year order.


The annual dividend chart looks like this, and the red line indicates the dividend yield based on the year-end closing stock price.


Rio Tinto has traded to yield 7.5% to more than 10% for the last four years. Note that dividends pay twice a year and can vary significantly from payment to payment.

If you believe that the global economy has entered a new commodity supercycle, Rio Tinto offers an attractive way to play that cycle. The company mines a range of minerals and will soon be producing lithium. The dividend policy pays out a significant portion of free cash flow as dividends, rewarding investors.

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