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Where I would reinvest my Rio Tinto Limited (ASX:RIO) dividends

This morning Rio Tinto Limited (ASX: RIO) shares traded ex-dividend for the mining giant’s fully franked $1.71 per share interim dividend.

While some shareholders may take advantage of the mining giant’s dividend reinvestment plan and others may use it as a source of income to live from, many shareholders will no doubt be looking to reinvest the funds back into the share market.

Here are two shares that I would consider investing these funds into:

Afterpay Touch Group Ltd (ASX: APT)

Investors interested in growth shares might want to take a look at Afterpay Touch. I think that the payment solutions company is one of the best growth shares on the local market right now. Last month the company provided a trading update which revealed that 10% of all e-commerce purchases in Australia are now made through its platform. In addition to this, it advised that its expansion into the United States had started strongly in respect to customer and retailer numbers. The only negative is that the market has got excited and a lot of future growth has already been built into its share price. Because of this I feel its shares are a high-risk investment and could be unsuitable for the average investor.

Dicker Data Ltd (ASX: DDR)

Those interested in earning even more income might want to consider this computer software and hardware wholesale distributor. It recently bolstered its offering with a distribution deal for the complete range of LG Commercial Display products. Although the deal may not have a big impact on its revenue, I expect it to support the solid growth that the company has delivered so far this year. This should put it in a position to continue growing its dividend at a solid rate over the coming years. And insiders certainly appear confident in this happening. Dicker Data already has high levels of insider ownership, but that didn’t stop directors topping up positions recently. And why wouldn’t they when its shares offer a forward yield of approximately 6%.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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