Rio Tinto surprised investors this morning by more than doubling its annual dividend and pledging to return $5bn to shareholders over the next couple of years.
However, the size of the share buyback over a relatively long period disappointed some shareholders who were hoping for more cash upfront. The shares were down 59p at £46 this morning, a drop of nearly 1.3%.
Rio and its peers are raking it in thanks to record copper prices and soaring iron ore and coal prices. The mining giant posted a record second-half profit of $8.2bn, although it just missed City forecasts, while sales of $33.6bn beat estimates. It reported record cash flows from operations and net debt was reduced to $4.3bn. It will pay out a dividend of 108 cents for 2010, compared with 45 cents the year before.
Rio's move has triggered hopes that rival BHP Billiton will step up its dividend payout and increase its $4.2bn share buyback when it reports results next Wednesday.
