Why is the Rio Tinto share price sinking today?

Why is this mining giant deep in the red today?

| More on:
A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Rio Tinto Limited (ASX: RIO) share price has taken a tumble on Thursday morning.

In early trade, the mining giant's shares are down 3.5% to $95.67.

Why is the Rio Tinto share price sinking?

The good news for investors is that today's decline has nothing to do with the company's performance, the economy, or the price of iron ore.

The weakness in the Rio Tinto share price is actually good news for shareholders. Today's decline has been driven by the mining giant's shares trading ex-dividend this morning for its upcoming interim dividend.

This means that if you were on the company's share register at the close of play on Wednesday, you'll be in line to receive Rio Tinto's second highest interim dividend in its history.

Unfortunately, buyers of its shares today and onwards will not be entitled to this dividend. As such, its shares have fallen to reflect this.

What is the Rio Tinto dividend?

At the end of last month, Rio Tinto released its half year results and revealed underlying EBITDA of $15.6 billion.

This allowed the company's board to declare an interim dividend of 267 US cents per share. This equated to a fully franked $3.837 per share in local currency.

Eligible shareholders can now look forward to being paid this dividend in around six weeks on 22 September.

Based on the Rio Tinto share price at yesterday's close of $99.18, this represents a yield of approximately 3.9% for investors. And there's still a final dividend to come early next year!

And given that the Rio Tinto board decided to be conservative with this dividend, that final dividend could be even larger if commodity prices remain solid between now and then.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Dividend Investing

2 market-leading ASX dividend stocks to buy in April

Analysts have put buy ratings on these market-leaders.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Man holding Australian dollar notes, symbolising dividends.
ETFs

Want the latest dividend from the Vanguard Australia Shares ETF (VAS)? Here's what you have to do

If you want to bag the latest VAS dividend, here's what you need to do.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Investing for passive income? Keep any eye out for that boosted Telstra dividend today!

If you own Telstra shares, keep an eye out for that juicy dividend payout today.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Invest $12,000 in Woodside stock and get $5,700 in passive income

Reliable dividend shares are everywhere on the ASX. Here's how you could use that to your advantage.

Read more »

Australian dollar notes in businessman pocket suit, symbolising ex dividend day.
Dividend Investing

3 ASX 300 dividend shares to buy in April

These shares have been named as buys by brokers and tipped to offer very attractive yields.

Read more »

A couple of friends at a rooftop party enjoying some hot and tasty Domino's pizza
Dividend Investing

Own Domino's shares? Today is pay day!

Eligible Domino’s shareholders can expect some welcome passive income today.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Opinions

3 top income-focused ASX shares to buy before April

I'd bolster my income by buying these dividend-payers before the next month rolls around.

Read more »