Shares of RIO Tinto have reached a one-month high of $70.40 following their announcement that they will return a further USD 2.5 billion to shareholders following the sale of Coal and Allied.
This will lift the total shareholder returns to USD 8.2 billion ($4 billion in share buybacks and $4.2 billion in dividends).
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Considering that the share buyback scheme will be done off-market, its likely that the shares could be priced 8 to 10% below market value.
Nevertheless, with RIO’s balance sheet getting a shot in the arm, we expect additional returns in dividends in February 2018.
Our longer-term target on RIO is in the $76.00 to $76.50 area.
Rio Tinto
