Good buy RIO - RTZ

[ZipserSir]

Share price has fallen 20% in the last month and the yield is nearly 7% - its come on to my radar. I have not held mining companies for some time, and it would make a good diversification. However, with the share price having already fallen so far so fast, I fear catching a knife. Anyone else with a view?

[tjh290633]

Better than buying a rocket and being burnt as you hold on to the stick. If you like the idea of 7% yield from a major company, why not buy some? The risk is political in the main, with China being a major customer for iron ore. Possibly why the price is depressed.

TJH

[monabri]

Be aware of their stated dividend policy

https://www.londonstockexchange.com/exc ... 72053.html

"Our shareholder returns policy
At the end of each financial period, the board determines an appropriate total level of ordinary dividend per share, taking into account the results for the financial year, the outlook for our major commodities, the board's view of the long-term growth prospects of the business and the company's objective of maintaining a strong balance sheet. The intention is that the balance between the interim and final dividend be weighted to the final dividend.

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

The board is committed to maintaining an appropriate balance between cash returns to shareholders and investment in the business, with the intention of maximising shareholder value "


And discussed here:

viewtopic.php?p=241378#p241378


Some info on RIO's historical yield levels over the last 5 years from "DividendData"

https://www.dividenddata.co.uk/dividend ... y?epic=RIO

[Arborbridge]

Be aware of their stated dividend policy

https://www.londonstockexchange.com/exc ... 72053.html

"Our shareholder returns policy
At the end of each financial period, the board determines an appropriate total level of ordinary dividend per share, taking into account the results for the financial year, the outlook for our major commodities, the board's view of the long-term growth prospects of the business and the company's objective of maintaining a strong balance sheet. The intention is that the balance between the interim and final dividend be weighted to the final dividend.

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

The board is committed to maintaining an appropriate balance between cash returns to shareholders and investment in the business, with the intention of maximising shareholder value "


And discussed here:

viewtopic.php?p=241378#p241378


Some info on RIO's historical yield levels over the last 5 years from "DividendData"

https://www.dividenddata.co.uk/dividend ... y?epic=RIO

Sounds a sensible policy -who could object to that?

[idpickering]

I would say that RIO are a great buy currently. I have a 'full' weighting of theses, alongside BHP Group in the sector. I'm tempted to go overweight in RIO by buying more tbh.

Ian.

[Dod101]

Miners are very cyclical. Do not chase yield. Still,it depends what you are looking for. If I were anxious for yield and living off my dividends I might consider, but if in the building phase, I would not look at it.

As it is I live off my dividends but I have quite enough volatility thank you.

Dod

[idpickering]

Miners are very cyclical. Do not chase yield. Still,it depends what you are looking for. If I were anxious for yield and living off my dividends I might consider, but if in the building phase, I would not look at it.

As it is I live off my dividends but I have quite enough volatility thank you.

Dod

A welcome reminder of the dangers of chasing high yielding cyclical shares Dod. Wise words indeed. Thank you, I may well just continue to hold, and not chase that yield, when I've no real need to.

Ian.

[Arborbridge]

Not chasing the yield is an easy slogan, but does it stands scrutiny? Is RIO going bust - are there other warning signs? (I don't have the answer!)
The share price has taken a big knock, but it is still above what it was last time the yield was this high and one would have missed big dividends if one had turned down the big yield. Yet generally, the SP has been heading upwards (even including this falling stage) and is positively sprightly compared with other high yielders such as BATs or IMB - both of which are being topped up by posters here. So where's the logic?

It's true that mining companies are very volatile and might depend on the latest spat between Trump and the rest, but volatility can be a good thing if you take advantage of it and have a largish portfolio. My solution to this was to buy income ITs which hold a spread of this sector so I didn't have to worry too much - but ironically my holding in BHP has turned out much better than those ITs.

I almost bought RIO myself recently, and with the geopolitical difficulties it looks attractive to a contrarian with patience - but I haven't yet taken the plunge simply because I don't need to, so I haven't come around to it.
Perhaps I should.

If high yield is the problem, they why hold it at all? - just sell it - otherwise one is chasing the yield. And finally, if 6-7% is too high, then there are an awful load of other shares in that same ball park we should be avoiding or selling.


Arb.

[idpickering]

Not chasing the yield is an easy slogan, but does it stands scrutiny? Is RIO going bust - are there other warning signs? (I don't have the answer!)
The share price has taken a big knock, but it is still above what it was last time the yield was this high and one would have missed big dividends if one had turned down the big yield. Yet generally, the SP has been heading upwards (even including this falling stage) and is positively sprightly compared with other high yielders such as BATs or IMB - both of which are being topped up by posters here. So where's the logic?

It's true that mining companies are very volatile and might depend on the latest spat between Trump and the rest, but volatility can be a good thing if you take advantage of it and have a largish portfolio. My solution to this was to buy income ITs which hold a spread of this sector so I didn't have to worry too much - but ironically my holding in BHP has turned out much better than those ITs.

I almost bought RIO myself recently, and with the geopolitical difficulties it looks attractive to a contrarian with patience - but I haven't yet taken the plunge simply because I don't need to, so I haven't come around to it.
Perhaps I should.

If high yield is the problem, they why hold it at all? - just sell it - otherwise one is chasing the yield. And finally, if 6-7% is too high, then there are an awful load of other shares in that same ball park we should be avoiding or selling.


Arb.

Yep, and wise words from your good self Arb. I agree that they’re unlikely to go bust. Maybe we should just concentrate on that tasty yield that’s on offer from buying RIO now, and just enjoy that. Other than that, no one can tell the future, and buy and hold should be best thing, and cheapest, too when you take in mind trading fees etc. And very HYP too.

Ian.

[Dod101]

Absolutely. Enjoy the yield. As I said I have enough volatility in my portfolio as it is and am now looking at either ITs or shares like Diageo.

Dod

[idpickering]

Absolutely. Enjoy the yield. As I said I have enough volatility in my portfolio as it is and am now looking at either ITs or shares like Diageo.

Dod

I'm not interested in ITs, off topic here anyway, but I hold Diageo, and have done for years. I've not touched it since purchase, and it quietly just plods along. Nice.

Ian.

[pyad]

...If high yield is the problem, they why hold it at all? - just sell it - otherwise one is chasing the yield. And finally, if 6-7% is too high, then there are an awful load of other shares in that same ball park we should be avoiding or selling.

Arb.

Agreed.

I've just checked and according to my source, based on forecast divs, there are 31 shares in the 100 with yields over 6%. Of those, 22 have yields over 7%. For comparison, the median forecast yield on the 100 is 4.36%.

And all this in a time of very low interest rates.

Naturally, not all of those HY shares will be suitable for HYP selection due for example to unacceptable fundies or diversification considerations in any particular port, but it does show that this is an unusually fortuitous time to be constructing an HYP in my view.

As for the falling price fear expressed by the OP, probably most shares acceptable for an HYP become so after a recent price fall.

[Arborbridge]

Absolutely. Enjoy the yield. As I said I have enough volatility in my portfolio as it is and am now looking at either ITs or shares like Diageo.

Dod

So. it's goodbye Dod the HYPer-ish investor and hello to a sort of mushy middle to low yield investor

We must bear that in mind when reading your comments.

BTW, I can quite see your point: if you have enough to live on, there is really no point in stretching for the highest yield or investing for volatility. Your circumstances are different to many HYPers.

But let's not shy away from the fact that this is an unusually bright time for yield investors, with many stalwart companies marked down. Havem't seen this since 2007 or the Gulf War, and it is definitely a time to invest rather than withdraw, in my view.

If I were starting now I would be buying over a period - say a year - to spread the risk out, of a possible slow down in the market. I know this is not conventional HYP wisdom, but it's my super cautious eggs in many baskets self speaking.

Arb.

[Dod101]

No I will still be a HYP-ish investor. I have always run two separate portfolios, one, the HYP-ish one, provides most of my income and the other is for Growth. Apart from anything else, it helps me judge how the individual shares are performing and what I expect from them. I have surplus income but I do not decry that. My circumstances are that I now live alone and am in complete control of my expenses. However there are five teenage grand daughters and they can very comfortably use up any surplus income that granddad may generate. It is just that maximising income is no longer a priority for me and I really find it very hard to receive a good dividend but to see the capital value decline alongside that income or at best more or less show no real increase.

Dod

[Arborbridge]

It is just that maximising income is no longer a priority for me and I really find it very hard to receive a good dividend but to see the capital value decline alongside that income or at best more or less show no real increase.

Dod

Especially when one is "of a certain age" and do not have the recovery time or salary to look forward to!
I can relate to that alright, being firmly in the "end game".

Arb.

[biffinsbridge]

Originally bought130 @ £38 as recommended by tjh. Have today bought 70 @£39 to take to full holding in my ISA. So far so good, price does seem to move about a great deal. As long as divi is maintained i'll be happy. regards Dick.

[idpickering]

Originally bought130 @ £38 as recommended by tjh. Have today bought 70 @£39 to take to full holding in my ISA. So far so good, price does seem to move about a great deal. As long as divi is maintained i'll be happy. regards Dick.

Nice one Dick. I’m sure you’ve done the right thing. I’m still tempted to buy more myself tbh.

Ian.

[YeeWo]

Originally bought130 @ £38 as recommended by tjh. Have today bought 70 @£39 to take to full holding in my ISA. So far so good, price does seem to move about a great deal. As long as divi is maintained i'll be happy. regards Dick.

Code: Select all

Date      | Type       | No. | SP      | Price       | Fee     | XIRR flow    |         |         
03-Oct-18 | BUY        | 125 | £39.290 |   £4,911.25 |  £35.06 |    £4,946.31 |         |         
17-Oct-18 | BUY        | 150 | £38.003 |   £5,700.38 |  £39.00 |    £5,739.38 |         |         
18-Apr-19 | CASH DIVI  |     |         |    -£878.65 |         |     -£878.65 |         |         
06-Sep-19 | CURR. VAL. |     |         |             |         | -£ 11,651.75 |         |         
          |            |     |         |             |         |       18.41% | XIRR    |         
          |            |     |         |             |         |              |         |         
          |            |     |         |             |         |              |         |         
          |            |     |         |   £9,732.98 |  £74.06 |   £ 9,807.04 | £ 35.66 | Avg Price
          |            |     |         | Share Price | £ 42.37 |  £ 11,651.75 |         |         
          |            |     |         |             |         |       18.81% |         |         
          |            |     |         | MoS/Loss    |         |   £ 1,844.71 |         |         


- RIO has done OK for me thus far.
- The dividend was clearly a Special last time and is going to be a Special on the 19 Sep.
- No reason not to hold forever notwithstanding inevitable volatility in the resources space.
GLA........