Did the Rio Tinto interim dividend really just tumble 52%?

A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.

The Rio Tinto Limited (ASX: RIO) dividend has been significantly slashed following the release of the company’s half-year results.

It appears investors are shrugging off the cut, sending the mining giant’s shares 0.38% higher to $97.35 apiece today.

Below, we take a look at what were the main drivers behind the company’s decision to significantly reduce its interim dividend.

Rio Tinto delivers sub-par performance for H1 FY22

Investors are bidding up the Rio Tinto share price today despite the company’s weakened financial scorecard.

The slump in iron ore prices led the company to report revenue of US$29,775 million for the 6 months ending 30 June. This represented a 10% fall over the prior corresponding period (H1 FY21).

The steel making ingredient accounts for 55% of the group’s gross product sales.

Consequently, the board opted to downsize its interim dividend by 52% to $3.837 per share.

It’s worth noting that no special dividend was announced this time round – a reversal from the regular special dividend that has been included since 2018.

Nonetheless, Rio Tinto boss Jakob Stausholm defended the lower dividend as reported by the Australian Financial Review.

He said that the previous interim dividend was unusually high and that the latest dividend reflects the company’s payout policy.

On average, Rio Tinto returns between 40-60% of underlying earnings through the cycle.

When asked about the global economic outlook and if the company is factoring this in, Stausholm said he’s “not concerned at all”.

He noted that China has managed to keep inflation relatively low despite other industrialised nations suffering the effects.

Rio Tinto dividend key dates

Rio Tinto provided the distribution amount and payment dates of its interim dividend for the 2022 financial year. Here’s a summary of the important dates Rio Tinto shareholders will need to know.

Ex-dividend date

The ex-dividend date falls on 11 August 2022.

Investors must purchase the company’s shares before this date to be eligible for the latest Rio Tinto dividend.

If you sell your Rio Tinto holdings before the ex-dividend date, you will not receive the upcoming dividend. However, if you sell your shares on or after this date, you will still receive the dividend.

Payment date

Rio Tinto is set to distribute a portion of its profit in the form of a dividend to eligible shareholders on 22 September 2022.

This is when you can expect to see the interim dividend of $3.837 per share paid in your bank account.

The post Did the Rio Tinto interim dividend really just tumble 52%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.

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