RIO’s 1H 2018 earnings result was slightly below the consensus forecast with underlying EBITDA of US$9.2 billion.
If we assume flat earnings and dividend growth over the next 12 months, it places RIO on forward yield of 4.5%.
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Returning cash to share holders through an increased share buy back program, (largely proceeds from asset sales), will help to underpin RIO’s current share price.
We recommend investors add a covered call option to enhance the income returns.
RIO goes ex-dividend US$1.70 on the 9th August.
Rio Tinto
