On Melbourne Cup day we wrote a report titled “Iron ore is under $US80/tonne is it time to reconsider buying”, at the time we went from being bearish about the sector to neutral which in hindsight wasn’t bullish enough, especially as we seriously considered Fortescue (FMG) as a yield play for our Active Income Portfolio. The markets now enjoying improved China reopening news which has helped iron ore bounce over 40% from its panic early November low however, we shouldn’t get too excited towards the bulk commodity as it’s still less than half of where it was 18 months ago.
Today we are going to look at the 4 main Australian players in the sector which haven’t danced exactly the same tune as the bulk commodity as they churn out cash leading to mammoth dividends and a number of meaningful buybacks.
- We like the risk/reward towards iron ore considering the relatively small bounce so far but it’s hard to gauge how far it can recover with so much dependent on Xi Jinping et al.
