2024-03-25 00:04:43 ET
Summary
- We are concerned about Rio Tinto due to China's struggling real estate and infrastructure market, a major consumer of the company's raw materials.
- The company's attractive dividend yield was a key motivation for us, but now we see limited potential for dividend increases in the next few years.
- While Rio Tinto is in the single digits only, it is close to a fair valuation compared to its major peers and its historical P/E ratios.
China Concerns
For readers following our writing, you may recall that we rated Rio Tinto ( RIO ) as Buy for price levels below $70 in the past 1~2 years. And that is also the price range where we accumulated our shares. Now, we are thinking about selling our shares and we are contemplating a target price in the same price range (say $70 to $75). It's been a pretty bad call considering how much the overall market has appreciated over this period. The saving grace is the generous dividends that we've collected during our holding period (more on this in the next sector)....
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Rio Tinto: We're Looking For An Exit Due To China Concerns