2021 was an excellent year for passive income investors holding Rio Tinto Ltd (ASX: RIO) shares.
With iron ore, Rio Tinto's top revenue earner, trading for more than US$220 per tonne in July of 2021, the S&P/ASX 200 Index (ASX: XJO) miner paid out an all-time high fully franked interim dividend of $7.60 a share in September that year.
While the dividend payments have come off the boil since then, with iron ore trading for US$92 per tonne on Friday, Rio Tinto shares continue to offer an attractive yield.
With that picture in mind, just how much passive income would you already have banked if you bought 300 Rio Tinto shares in early 2021?
Let's dig into some numbers.
Drilling into Rio Tinto shares for passive income
Along with the soaring iron ore price, the Rio Tinto share price flew higher during the first half of 2021.
Still, you could have picked up shares in the ASX 200 miner for $110.31 on 29 January that year.
Meaning your 300 shares bought with passive income in mind would have set you back $33,093.
On Friday, Rio Tinto shares closed down 0.5%, trading for $113.02 apiece. That would bring the value of your 300 shares to $33,906
So, from a capital gains perspective, you would have gained 2.5%.
Not exactly shooting the lights out over a three-plus year period. But better than a loss!
Now, how about that passive income?
If you'd bought Rio Tinto stock in January 2021, you'd have been eligible to receive the past eight dividend payments, including the record interim payout in 2021.
Well, almost.
Rio Tinto shares traded ex-dividend on 15 August. The ASX 200 miner will pay the fully franked interim dividend of $2.617 a share this Thursday, 26 September.
But, as you're already eligible to receive that, we'll factor the upcoming payment in here.
So, according to my trusty calculator, the eight dividends Rio Tinto has paid out since early 2021 total $35.66 a share (rounded to the nearest cent).
Your 300 shares purchased in 2021 will then have delivered a rounded $10,698 in passive income, with potential tax benefits from those franking credits.
So, let's add that back into the current $33,906 value of those shares.
That brings the accumulated value of your 300 Rio Tinto shares purchased in January 2021 for $33,093 to $44,604. Or a gain of 34.8%.
This again goes to remind us of the sizeable difference dividends can make in our long-term returns. If, of course, we buy the right ASX dividend stocks.
