The Rio Tinto Limited (ASX: RIO) share price continued its strong run on Thursday and climbed to a decade-high of $97.29.
This latest gain means that the mining giant's shares have now risen a staggering 27% since the start of the year.
Why is the Rio Tinto share price up 27% in 2019?
Investors have been scrambling to get hold of Rio Tinto's shares this year thanks to its impressive performance in FY 2018, generous dividends, and favourable commodity price movements.
In February the company released its full year results and revealed a 56% increase in net earnings to US$13.638 million. While this was driven largely by gains on the disposal of assets, underlying earnings per share still grew by a solid 6% to 512.3 U.S. cents.
The mining giant also generated US$7 billion of free cash flow despite a significant rise in capital expenditures.
This strong result, its robust balance sheet, and the sale of non-core assets meant the company was able to return an extra US$7.2 billion to shareholders.
It did this via a special dividend of US$4 billion and a US$3.2 billion share buyback which will be completed no later than February 2020.
The good news is that thanks to favourable commodity price movements, I feel the company is well-positioned to rewards shareholders with further capital management initiatives in FY 2019.
Due to the dam disaster at Vale's operation in Brazil earlier this year, iron ore prices have been going berserk and recently hit multi-year highs. Although they have pulled back a touch in recent days, they are still sitting significantly higher than where they were a year ago.
Furthermore, due to tightening supply, many experts are tipping them to stay at elevated levels for some time to come.
Unsurprisingly, this has led to BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares also rocketing higher this year. BHP's shares hit a 52-week high on Thursday and Fortescue's shares are just a few cents short of their 52-week high.
Should you buy Rio Tinto shares?
Whilst I wouldn't expect another 27% gain over the next three months, I feel there's still some decent upside for Rio Tinto's shares this year.
In fact, a note out of Macquarie earlier this month reveals that it has an outperform rating and $106.00 price target on its shares.
This could make it worth considering along with BHP if you're looking for exposure to the resources sector.
