Rio Tinto Limited (ASX: RIO) shareholders rejoiced last week when the company paid out its latest dividend.
The mining giant distributed a partially franked interim dividend of $3.837 per share to eligible investors.
However late last night, Rio Tinto provided an update to its dividend reinvestment plan (DRP).
Currently, Rio Tinto shares are swapping hands at $90.07, down 0.35%.
For context, the benchmark ASX 200 is also heading south by 0.67% following a broader fall across Wall Street overnight.
Let’s take a look in more detail at exactly how much Rio Tinto is offering shareholders with its DRP.
Rio Tinto updates DRP amount
If you elected into Rio Tinto’s DRP before 1 September, you’ll be receiving some extra shares instead of the cash dividend.
The company determined the DRP price will be around $90.49 per share which is the average price over the last several days.
These shares are expected to be allotted to shareholder portfolios this Friday.
In case you were wondering, there was no DRP discount that was offered.
Opting your dividends to be transferred into shares can pay off in the long run. Particularly, if you are holding a quality blue-chip share like Rio Tinto.
As Albert Einstein once pointed out, “Compound interest is the eighth wonder of the world. He who understands it… earns it. He who doesn’t… pays it.”
Over the last 5 years, Rio Tinto shares have accelerated from around $65 per share to $100 at the end of August. That represents a 50% increase, not including the reinvestment of dividends.
On average, an ASX 200 share grows about 7% annually.
And with the exchange rate fluctuating in favour of the US dollar against the Aussie dollar, you could receive more when Rio Tinto delivers its final dividend.
Rio Tinto share price snapshot
The Rio Tinto share price has fallen 10% in 2022 and is down almost 8% over the past 12 months.
Rio Tinto has a price-to-earnings (P/E) ratio of 5.27 and commands a market capitalisation of roughly $33.55 billion.
The post Want to compound your Rio Tinto dividends? Here’s what you need to know 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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