Image source: Shutterstock

Highlights

  • Rio Tinto shares rise 1.92%, S&P/ASX 200 Index increases 0.19%
  • Final FY24 dividend of A$3.71 per share for Australian investors
  • Dividend reinvestment plan participants may see shares bought on-market

Rio Tinto Ltd (ASX: RIO) shares have increased by 1.92% on Thursday, reaching A$110.52, while the S&P/ASX 200 Index (ASX: XJO) saw a more modest rise of 0.19%. However, investors in the mining company are likely not focusing on this stock price movement today, as the real attention is on the company’s upcoming dividend payment.

The mining giant declared a final dividend for the financial year 2024 of US$2.25 per share on February 20. Following a currency conversion process conducted on April 8, the final dividend for Australian investors has been set at A$3.71317765 per share. This conversion was based on an exchange rate of 60.595 cents to the US dollar. The dividend will be fully franked, meaning that the tax has already been paid by Rio Tinto, offering a tax benefit to shareholders in Australia.

For those participating in Rio Tinto’s dividend reinvestment plan (DRP), the process differs slightly. Instead of receiving cash, DRP participants will receive additional shares in the company. Rio Tinto will purchase these shares on the open market, either on the dividend payment day or as soon as possible. The exact number of shares each investor will receive depends on the average price paid during these transactions.

The recent downturn in Rio Tinto's share price, which has fallen by 9.4% from when the company announced its full-year FY24 results, may benefit DRP participants. This is because they could potentially receive more shares for the same amount of dividend payout, given the lower share price. The company will report the final DRP share price after the purchases have been completed.