Shares of Rio Tinto Limited (ASX: RIO), the world's second-largest iron ore miner, leaped 4% higher on Monday.
Then, overnight in London, as fears of Britain exiting the Eurozone again received attention from investors, Rio Tinto's FTSE-listed shares jumped 6.5%.
No doubt many investors will be left wondering if it's time to buy into one of Australia's mining success stories.
Are Rio Tinto shares ridiculously cheap?
At $45 a share, Rio Tinto shares appear to be trading on a decent valuation, given its price-earnings ratio of 14x, with a dividend yield of 3.2% to boot.
Not so fast.
Despite its cheap appearance on first glance, Rio Tinto is forecast to cut its dividend heavily over coming years as it grapples with the fallout in mining and the associated slump in profits. Next year, in fact, the miner is forecast to pay just $1.49 in dividends, according to current consensus estimates. This year, it paid $2.91.
Foolish takeaway
Rio Tinto's short-term price movements appear to be a result of Britain's possible exit from the Eurozone, and the all too commonplace kneejerk reaction by share market investors to flee to commodity stocks in times of economic or political uncertainty.
Together with rival BHP Billiton Limited (ASX: BHP), Foolish investors would be wise to look past the recent price movements and go in search of high-yielding dividend shares to buy today.
