Rio Tinto vs BHP Which Outperforms?

Rio Tinto and BHP are two heavyweight players in the mining industry with significant influence on the global economy. Both companies have a strong track record of delivering solid financial performance and have established themselves as reliable investment options for both institutional and retail investors. However, despite their similarities, their stocks have shown noticeable differences in terms of market performance, growth potential, dividend yield, and overall market sentiment. It is important for investors to carefully analyze and understand these factors before making investment decisions in either of these companies.

Rio Tinto or BHP?

When comparing Rio Tinto and BHP, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Rio Tinto and BHP.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Rio Tinto has a dividend yield of 7.17%, while BHP has a dividend yield of 5.58%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Rio Tinto reports a 5-year dividend growth of 5.54% year and a payout ratio of 63.95%. On the other hand, BHP reports a 5-year dividend growth of 15.32% year and a payout ratio of 97.14%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Rio Tinto P/E ratio at 9.18 and BHP's P/E ratio at 16.85. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Rio Tinto P/B ratio is 1.78 while BHP's P/B ratio is 2.96.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Rio Tinto has seen a 5-year revenue growth of 0.41%, while BHP's is 0.31%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Rio Tinto's ROE at 19.50% and BHP's ROE at 18.25%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $60.31 for Rio Tinto and $52.10 for BHP. Over the past year, Rio Tinto's prices ranged from $59.35 to $75.09, with a yearly change of 26.52%. BHP's prices fluctuated between $50.90 and $69.11, with a yearly change of 35.78%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.