10 May 2013

Rio shareholders want bigger dividend

6:26 am on 10 May 2013

Rio Tinto shareholders want high dividend payments. But the mining company refuses to do so.

Richard Giles from the Australian Shareholders Association told Rio Tinto's annual general meeting in Sydney that his members thought the mining group should be paying much higher dividends.

"We believe that you should be moving to a more traditional dividend policy whereby you pay out 60%, 70% or 80% of the profits you earn every year as opposed to your so-called progressive policy which over the last five years had paid out only 20% of profits as dividends," he said.

But chairman Jan Du Plessis said the company had recently reassessed its dividend policy and decided to stay with the one it had had for a number of years.

"We believe that's right and its also the policy of all the major mining companies," he said.

AAP reports Mr Giles also said Rio Tinto had built up billions in franking credits and could use them to pay Australian shareholders.

"Because your Australian operations are so successful relative to the rest of the world, there's a huge built-up surplus of franking credits," he said.

"And I believe that a higher dividend policy would contain that but in addition given the size of the surplus I think the company has an obligation to do something about it for Australian shareholders."

But Mr Du Plessis said if the company used its franking credits to pay shareholders, it would not have enough money to reinvest.

At 2.25pm (AEST) on Thursday, Rio Tinto shares were down 64 cents, or 1.09%, to $A58.26.