I am adding Rio Tinto US $ ADR to my both my Income and Growth portfolios under the Materials Sector.
Rio is a major global mining company based in the UK with operations in Australia, North and South America, Europe and South Africa.
Its production includes the following:
- copper, aluminium, diamonds, and iron ore
- coal and uranium
- borax, titanium dioxide and salt
The company offers a strong balance sheet, rising operating and free cash flows.
The current dividend yield is 4.9% and the free cash flow is more than sufficient to cover the dividend with a payout of 55%.
The company has recently decided to sell its thermal coal operation and expects to receive proceeds of $2.45 billion.
Rio is a conservative way to participate in rising commodity markets with its strong dividend and healthy balance sheet.