Everything you need to know about the latest Rio Tinto dividend

Miner holding cash which represents dividends.

Miner holding cash which represents dividends.After the market close on Wednesday, Rio Tinto Ltd (ASX: RIO) released its full-year results.

For the 12 months ended 31 December, the mining giant reported a 13% decline in revenue to US$55,554 million and a 41% reduction in net profit after tax to US$12,420 million.

This reflects the movement in commodity prices, the impact of higher energy and raw materials prices on its operations, and higher rates of inflation on operating costs and closure liabilities.

As you might have guessed from its significant profit decline, the Rio Tinto dividend has come under pressure.

Rio Tinto dividend

In response to its softer earnings, the Rio Tinto board elected to cut its fully franked final dividend by 46% to US$2.25 per share.

This brought the Rio Tinto dividend to a total of US$4.92 per share in FY 2022, which is a 38% reduction on what was paid a year earlier. It also equates to a total payout of US$8 billion for the year and represents a payout ratio of 60% of underlying earnings.

The good news for investors is that based on current exchange rates and the latest Rio Tinto share price, this still provides shareholders with a generous fully franked 5.8% dividend yield.

But if you want to get hold of Rio Tinto’s final dividend of FY 2022, you’ll need to act reasonably fast.

The mining giant’s shares are scheduled to trade ex-dividend in a couple of weeks on 9 March. After which, the miner is scheduled to pay eligible shareholders this dividend the following month on 20 April.

Where next for its dividends?

Unfortunately, another dividend cut is widely expected in FY 2023.

For example, according to a note out of Goldman Sachs, its analysts expect an 8.5% reduction to US$4.50 per share.

The good news, though, is that its analysts are then expecting a rebound the following year.

They have pencilled in an increase to US$5.50 per share in FY 2024. And while it’s not quite FY 2021 levels, it certainly is a step in the right direction.

The post Everything you need to know about the latest Rio Tinto dividend appeared first on The Motley Fool Australia.

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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.

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