RIO share price in focus
Founded in 1873, Rio Tinto is today the world’s second largest metal and mining company, behind only BHP Group. Rio Tinto is engaged in minerals and metals exploration, development, production and processing.
Rio can be divided into four core business units: Aluminium, Copper & Diamonds, Energy & Minerals and Iron Ore.
Of the four units, iron ore (the primary component in steel manufacturing) is by far the largest export. It’s no surprise then that the performance of the company can be strongly affected by the price of iron ore and other key commodities, making earnings somewhat volatile.
REH shares
Reece Limited has been operating in Australia for more than 100 years, and is today the country’s largest plumbing and bathroom supplies business.
While best known as a plumbing store, the brand has diversified to offer services and products across irrigation and pools, civil constriction projects, and HVAC systems for heating, ventilation, and refrigeration.
Reece has grown revenue at a steady clip the past few years and, while the dividend yield has typically been low, the payments have been quite consistent.
RIO & REH share price valuation
One way to have a ‘fast read’ of where the RIO share price is could be to study something like dividend yield over time. This can give us a sense of the stability of the company and whether they can consistently pay out a percentage of profits.
Remember, the dividend yield is basically the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Rio Tinto Ltd shares have a dividend yield of around 5.63%, compared to its 5-year average of 6.80%. In other words, RIO shares are trading lower than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends have fallen, or that the share price is increasing, or both. In the case of RIO, we can see that last year’s dividend was less than the 3-year average, so the dividend has been falling.
REH is offering a historical dividend yield of around 1.62%, which compares to its 5-year average of 1.06%. This is just one of many ways you could put a value on REH shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets which can help you learn how to value a company like RIO or REH.
