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Rio Tinto (NYSE: RIO / ASX: RIO) is one of the largest mining companies, with operations pretty much everywhere on the planet.

They are the second largest iron ore miner on the planet - behind Vale and above BHP - also producing some copper, aluminum and several more. As you are about to see, despite being relatively volatile - which is normal for a commodity company - this can be a very good dividend stock to consider.

They can produce on average around $10 billion, with the average of the past 5 years being $10.6 billion. Last year, they made $7.7 billion, most of which went into the dividend, which isn’t that great.

Regarding the dividends, Rio Tinto pays on average around half of the earnings, which is ideal for a commodity company because this way, you can enjoy the upcycle. We can see for example a very nice 15.5% yield in 2021, and on average, especially if you buy this during the downcycle, you can get something like 6% to 8% or even more.

So, financials, dividends, and this kind of things - Rio is very good from this point of view, especially if I buy when the price is low.

And, they also decreased the number of shares a bit in the past decade, so that’s another plus. Now, if they do some merger or big acquisition, they might issue some shares like gold miners often do, but this isn’t a bad thing unless they massively overpay. The value of the company goes up and the stock price remains the same, but the value for you as a shareholder is in potential discounts in case the target company was cheap, synergies, projects and stuff like that.

Now, iron, like almost any other commodity, comes with an inherent exposure to China. That’s because the country represents around 70% of the iron ore demand, so whatever happens in China, happens to the price of iron, as we can see many times in the past.

But, this doesn’t have to be a negative, especially if the country keeps growing even if just a bit. There is also potential from other countries developing and requiring a lot more iron - like India - so this commodity should see some small but constant growth.

They show this interesting graph with the growth in steel demand by industry in China. We can see that stuff like solar power, lithium batteries and EVs showed massive growth in the past year. So, even if it may not be a lot as a quantity today, this can become very significant in the future.

Now, the CEO said that they are interested in lithium although they aren’t looking into some big acquisition. I talked about this as a potential risk in the lithium videos that I made, but in this case, this would be an opportunity. The lithium industry is relatively very small and for a company like Rio Tinto, it would be very easy to buy one of the top lithium companies, because they make more than enough money to afford it.

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DISCLAIMER: I am not a financial advisor and nothing on this channel should qualify as investing advice. All information is provided for your education or entertainment. It is not intended to be investment advice. This information is general in nature and has not taken into account your personal financial position or objectives. Seek a duly licensed professional for investment advice.

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