The Motley Fool

Rio shareholders expecting big payday

Argyle, a Rio Tinto (ASX: RIO) mine is all but set for sale as analysts speculate the big miners are in for some short-term rallies on the back of asset sales and juicy dividends.

In the Kimberley region of WA, Argyle Diamond mine is being speculated as the next big asset to be sold by the mining giant. Rio is eager to impress investors as the share price has fallen in recent months, which can be attributed to potentially volatile commodity prices in years to come.

The Argyle underground mine is known for its sparkling diamonds and is worth an estimated $2.2 billion, since it recently undertook a bout of underground renovations. Although it is not up for sale yet, Rio boss Sam Walsh said the company is focusing on raising funds by selling assets, which include diamonds.

Woodside Petroleum’s (ASX: WPL) ‘special’ dividend, will be paid to shareholders who held the stock overnight, and has prompted many resource companies to follow suite. As miners such as BHP Billiton (ASX: BHP) feel the pressure of lower expectations, investors need something more to push them back into the resources sector. BHP has already announced plans to sell some key assets as a strategy to entice investors back into the stock.

BHP, Rio and Fortescue Metals Group (ASX: FMG) are all trading at a premium and although they may not reach their recent highs anytime soon, the companies are still considered undervalued by many analysts.

It wasn’t that long ago that Australians were dumping retail stocks left, right and centre. Now, less than 12 months later some of our biggest retail stocks have experienced tremendous gains, despite the high Australian dollar and the ever looming ‘global uncertainty’.

Foolish takeaway

Finding stocks that fit your style of investment will help give you peace of mind. In the short term, if our big miners can offer some large dividends, it is likely the share price will rise. However, in the medium term they could drop slightly as the industry tries to establish itself with greater iron ore supplies and increased competition. Perhaps the time is now to start seriously considering whether or not mining stocks are right for your portfolio.

Not ready to take a chance on the mining sector? The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz owns shares in Rio Tinto.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.