Copying and distributing are prohibited without permission of the publisher

Rio top pick at Liberum; stress tests for major miners

April 29, 2013 - 13:25 GMT Location: London

KEYWORDS: Rio Tinto , BHP Billiton , Anglo American , Glencore , Xstrata , shares , dividends , Liberum

Analysts at Liberum Capital have upgraded Rio Tinto to their top pick among the major mining companies, they said in a note on Monday April 29.

Their order of preference among the majors is now led by Rio, with a buy recommendation, followed by the merged Glencore-Xstrata and BHP Billiton, both also buys, and finally Anglo American, with a hold recommendation. "Dividend coverage looks extremely robust [at Rio Tinto] under stressed commodity prices," the analysts said. They have also tested the strength of dividends at the majors under a stressed commodity environment, and have found that they all continue to cover dividends through free cash generation.  Glencore-Xstrata and Rio have the strongest coverage for their dividends, although BHP still holds major flexibility in its capital expenditure programme in onshore oil and gas, the analysts said. Only Anglo fails to cover a BHP equivalent yield of 4.1% with free cash under their bear-case commodity scenario, according to the analysts. Glencore-Xstrata’s free cash generation could easily support a BHP yield, they said, and it is the best capital and operating...

All material subject to strictly enforced copyright laws. © Euromoney Institutional Investor PLC.

subscribe to this feed Comment & analysis

Upcoming Events

MB Glossary

From Aluminium to Zinc...
Search this free glossary on metals

Try the new Metal Bulletin BETA site...

We've added some great new features and tools which we think you'll find useful including:

  • Easier to find the content suitable for you
  • Improved Price Book functionality
  • Better search function

Simply click 'Yes please' below to go straight to the BETA site (you can return to the original site any time you wish).