‘Gushing cash’: iron ore miners a yield favourite – by William McInnes (Australian Financial Review – June 23, 2020)

https://www.afr.com/

A soaring iron ore price has made the major iron ore miners an attractive option for yield-hungry investors, with alternatives scarce in the Australian sharemarket.

The investment case for Rio Tinto, Fortescue Metals Group and BHP Group is hard for investors to overlook as dividend cuts and earnings downgrades dominate the rest of the market.

“The major mining companies are in a really strong position,” said Yarra Capital Management’s head of Australian equities, Dion Hershan. “These businesses are literally gushing cash and they have very attractive valuations in a market where it’s really hard to find value.

“And they’re only firing on few cylinders because most commodities are quite weak at the moment.”

Iron ore prices rocketed through $US100 a tonne in May after Brazil’s iron ore supply chain was temporarily disrupted by the COVID-19 pandemic, and the metal is up nearly 40 per cent since the start of the year.

For the rest of this article: https://www.afr.com/markets/equity-markets/gushing-cash-iron-ore-miners-are-a-yield-favourite-20200616-p552z7

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