Rio to keep progressive dividends

Rio Tinto Ltd has indicated it will continue with delivering progressive dividends despite growing concerns over the policy, The Australian reports.

The miner's chief executive officer Sam Walsh told the newspaper that most of Rio Tinto's shareholders were in favour of increased dividends each year, regardless of earnings results.

"For me, the feedback I'm getting from shareholders is that progressive dividends are the way they want to go," Mr Wash told the newspaper.

"They want to be certain that dividends aren't going to go backwards and, with a payout ratio, of course, they could."

Critics of progressive dividends argue excess cash flow can spur companies into bad acquisitions of inflated assets, such as Rio Tinto's  Alcan acquisition which led to nearly $30 billion in writedowns and the resignation of former chief executive officer Tom Albanese.

However Mr Walsh said there were no mergers on the cards at present, The Australian reports.