Another day, another record high. It’s been a similar story for the benchmark ASX 200 index in the last few weeks. The premiere index made modest gains today as the ASX 200 gained 7 points or 0.1% and closed at 7386.2 points.
News regarding China’s efforts to reduce the soaring commodity prices weighted on the mining and resources industry. Oz Minerals was the worst performer during the day with a 6.7% fall and Nickel Mines continued its downward spiral with a 4.8% decline. In the green zone today was most notably Promedicus with a 3.6% increase and finally, Costa Group ended the day in the positive with a 2.7% gain.
The miners declined, however inflationary prices are pointing towards high commodity prices in the short to medium term. The high prices will mean stronger profits for the mining companies, which will translate into fat dividend payments come the end of the year. With Australia home to several top class miners, investors have access to several options to play out the cycle.
Fortescue Metals Group is one of the largest iron ore producers in the world and it has performed exceptionally well during a very turbulent 2020. FMG has returned over 100% in the past year, with significant gains in the past 6 months. High iron ore prices and a halt in operations to one of its biggest competitors has resulted in an exceptional share price performance. They are also one of the top dividend stocks listed on the ASX with current annual yields coming in at over 9%. FMG is arguably the best pure play iron ore stock on the ASX. They have had a record half year with shipments, earnings, and operating cash flows being at all time highs.
With iron ore prices sky high, their full year profits will swell once again – leading to higher dividend payouts. FMG is a top class ASX share to own right now with high iron ore prices and a strong Aussie dollar providing tailwinds.
FMG shares closed at $22.71 a share after declining by 1.63% in today’s session.
Rio Tinto is a well diversified global mining powerhouse that is second in global size, behind only BHP. The firm is dual listed on the ASX and London’s LSE. Rio operates across commodities such as Aluminium, Copper & Diamonds, Energy & Minerals, and Iron Ore.
The stock prices of the big 3 miners were being swayed by the sky high iron ore pieces in recent weeks. It’s not just iron ore though, commodity prices across all the commodities that RIO mines have been soaring and the inflation data continues to push it higher. These prices mean that being a producer is the place you want to be in as the cost can be passed over to the customers.
RIO as a result has been driving in the profits from this commodity supercycle that we are a part of. RIO achieved an overall extremely positive first quarter result in 2021 and the company has maintained their guidance across all the commodities it mines. The thick stacks of profits mean that the dividends will once again be extremely high at the end of the year, which is fast approaching.
At the end of today’s trading session, BHP shares slipped marginally by 0.61% and closed at $125.71 a share and BHP will be a contender for one of the best dividend stocks on the ASX.
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