Why Rio Tinto’s Share Price Fell 4.52% in Yesterday’s Trading

This year has seen shares of Rio Tinto Ltd [ASX:RIO] hit a multi-year high of $97.29 on the back of a surging iron ore price.

But that all changed when the company traded its ex-dividend yesterday morning — meaning they no longer hold the right to its next dividend.

It can be assumed that investors are adjusting their buy or purchase price in reflection of this.

At time of writing, Rio Tinto’s share price is at $92.05, down 1.40%.

Shareholders (those on the registry at close on Wednesday) should see their dividends paid around 18 April this year.

Related: In this just released report, Matt Hibbard shows you his top five dividend picks for 2019.

Is Rio Tinto’s share price set to recover?

While yesterday’s drop in share price was expected, it is possible that Rio’s shares will start climbing again as we move further into next week.

Why? Well when it comes to commodities, it pays to know your conditions.

As many analysts know, the iron ore price is closely linked to the performance of major companies like as like Rio Tinto. For example, we saw a boost between 2008–13, as Chinese demand for iron ore surged.

During this period, we saw Rio Tinto’s shares hover above $146

And there’s talk that iron ore prices could potentially rally on the back of optimism in US–China trade agreement.

Investors should note the changes for companies like Pilbara Mineral Resources; the estimates of mineral resources for iron ore deposits in WA in particular are comparable to those made in the 2017 annual report.

Following technical work in 2018 across many deposits, mineral resources now sit at 23,319 tonnage — up from 22,538 recorded in the previous year. Additionally, there has been an increase in production at two of Rio’s projects — Music Hall/Old Vic and Western Hill.

Rio Tinto’s 2019 outlook

The value of Rio Tinto shares has been edging higher over the last six months, but yesterday’s ex-dividend announcement did put a brake on things.

However, looking forward into 2019, we expect that Australia’s biggest mining company will experience a production increase as it heads further toward asset growth.

As it stands, Rio Tinto has a huge market cap of $34.17 billion, and a high dividend yield of 4.58%.

Investors will have to weigh up whether to purchase Rio Tinto shares at its reflected price, or whether it’s worth waiting for its next dividend pay-out…

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: If you’re unsure about which mining stocks are for you, check out this FREE report: ‘10 ASX Resource Stocks You Should Be Watching’. Download now for free.

 


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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