As an ASX 200 mining share, and a giant one at that. Rio Tinto Limited (ASX: RIO) has been delighting passive income investors for decades.
This miner has historically paid out relatively large, fully-franked dividends to ASX investors, which has allowed shareholders to fund living expenses or expansion of their investment portfolio.
Rio Tinto's income prowess has been especially conspicuous over the past couple of years. The miner paid out its largest dividends in history over 2021 and 2022, thanks to booming commodity prices.
But now that we are in 2023, and some of those commodities have come off the boil, what can passive income investors expect from their Rio shares today?
Let's answer that question by analysing how much you would have to invest in this iron ore miner in order to obtain $3,000 a year in passive, dividend income.
Okay, let's start at the beginning. Rio has (or will) pay out two dividends in 2023, as is the norm for any ASX 200 blue-chip share. The first was the final dividend from April, worth a fully-franked $3.26 per share. The second is the interim dividend of $2.61 per share (also fully franked) that will hit shareholders' bank accounts next week on 21 September.
How much would it cost to secure $3,000 in passive income from Rio Tinto shares?
Together, that comes to an annual total of $5.87 in dividend income per share. That's down significantly from 2022's total of $10.47 per share, as well as 2021's total of $12.77 per share. Both of those figures include special dividends, which Rio has declined to pay this year.
Going forward, let's assume that Rio will pay out the same level of passive dividend income over the coming year as it has over the past 12 months (as of 21 September).
Of course, that is by no means guaranteed. Rio could raise its 2024 dividends from 2023's levels, or else slash them. We won't know until the company itself announces its income payments next year. But using this year's levels does give us a rough guide.
So if every Rio share yields $5.87 in dividend income on an annual basis, we would need around 511 Rio shares to secure an annual passive income stream of $3,000.
Today, Rio shares are going for $114.50 each at the time of writing, up a decent 1.9% for the day thus far. At this share price, buying 511 shares would cost an ASX investor a grand total of $58,509.50.
The $3,000 we would receive in passive dividend income from those shares (again assuming 2024's payouts match 2023's) would then give us a dividend yield of 5.13% on our money.
I guess that's why they say you have to have money to make money.
