Rio Tinto is expected to shower its shareholders with dividends, despite an expected fall in revenue, as a prelude to a possible capital return when it posts its half year results later today.
The big miner has been cutting costs, increasing ore output, pulling back on capital spending and cutting debt.
Morgan Stanley says the dividend increase could be as high as 15%. Other estimates are for about 7% to $1.16.
Rio’s net earnings for the six months to June were $4.402 billion.
Analysts forecast underlying earnings at $3.76 billion, a 37% fall, for the second half of the 2014 calendar year.
The company has been increasing production to make up for falling commodity prices, particularly iron ore. In 2014 Rio shipped a record 302.6 million tonnes of iron ore, 17% higher than the year before.
“We have reduced our costs, we have reduced our debt, we have substantially reduced our capital and that puts us in an incredibly good position to materially increase shareholder returns,” CEO Sam Walsh said.
He said Rio is still making profits and is at an advantage compared to its higher cost rivals, due to progressive cuts to production costs.
Rio’s share price has been trading higher ahead of the results announcement. Today it’s up 0.47% to $60.08.