Unlocking Share Value: How Rio Tinto (ASX:RIO) and Reece (ASX:REH) Stack Up in the ASX200

June 23, 2025 02:54 PM AEST | By Team Kalkine Media

Unlocking Share Value: How Rio Tinto (ASX:RIO) and Reece (ASX:REH) Stack Up in the ASX200 — Image source: Shutterstock

Rio Tinto (ASX:RIO): Earnings Tied to Global Commodity Cycles

Rio Tinto, one of the world’s largest metals and mining companies, has seen its share price retreat by roughly 14.5% since the start of 2025. Its business spans aluminium, copper and diamonds, energy and minerals, but iron ore remains the dominant revenue driver. Given the close link between iron ore prices and company performance, RIO’s earnings can fluctuate sharply with global commodity trends.

Looking at dividend metrics, RIO currently offers a yield of approximately 6.43%, slightly below its five-year average of 6.80%. This signals a potential adjustment in valuation, but it’s important to factor in recent trends—last year’s dividend payout was lower than the three-year average, indicating that declining dividends may be contributing to the lower yield. This suggests a need for caution when interpreting the numbers purely at face value, as they may reflect broader operational or market challenges.

Reece (ASX:REH): Steady Growth and Consistency

In contrast, Reece has charted a steadier path. As Australia's largest supplier of plumbing and bathroom products, the company has expanded into irrigation, civil infrastructure, and HVAC systems. With over a century of operations, Reece has established a reputation for consistency and adaptability.

The REH share price is currently trading around 22.5% above its 52-week low, pointing to market optimism. Its dividend yield stands at approximately 1.55%, notably higher than its five-year average of 1.06%. This may suggest that while the yield remains modest compared to heavyweights like RIO, it reflects both price performance and stable earnings—a hallmark of a defensive business.

A Simple Approach to Gauging Value

While dividend yield is just one metric, it offers a quick snapshot of a company’s financial health and shareholder returns. RIO’s higher yield may attract attention, but it’s essential to understand the drivers behind it—particularly earnings volatility. On the other hand, REH's consistent payout and moderate yield may appeal to those seeking stability.

For investors exploring the broader ASX200 landscape, dividend trends can serve as a practical starting point to filter companies for deeper analysis, helping to align expectations with reality in a dynamic market.

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