|AUD per share|
Rio Tinto Ltd. paid a total dividend of 941 million AUD last year, for a market capitalization of 25,635 millions. Dividend per share of Rio Tinto Ltd. is 2.22 AUD, and his stock market price 60.46 AUD.
According to the chart below, where dividend yield is displayed, Rio Tinto Ltd. has a dividend yield of 3.68%, which is higher than the amount offered by both the market average and companies from Australia. It is also bigger than average of Basic Materials industry. This high dividend yield might be a sign to worry about the future of the company so deeper analysis is needed.
About the ability of Rio Tinto Ltd. to maintain his current dividend of AUD 2.22 per share, an amount that accounts for 3.68%, we should study its payout ratio both on earnings and on cash-flows (see chart below). Rio Tinto Ltd. payout on ernings is currently 61.33%, which is higher than the market average, and companies of Basic Materials industry, which are 39.68% and 30.78% respectively. Both figures show that Rio Tinto Ltd. can have problems to keep with his present dividend yield.
The payout on earnings should be complemented with the payout on cash flow since it is this latter amount the one which can be distributed to shareholders. Cash flow per share of Rio Tinto Ltd. is AUD 6.36 per share, which is higher than the dividend per share paid by the company of AUD 2.22, so the company generates enough cash to maintain his dividend in the future.
The following figure shows payout ratios over earnings and cashflow of Rio Tinto Ltd., compared againt world market average, Australia companies, Basic Materials industry and Mining sector companies. You might also need to check full financial report of Rio Tinto Ltd..
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