Rio Tinto is due to pay a dividend of 319.5p per share/7.2% on Thurs 7 Mar

• Rio Tinto pays a 319.5p/7.2% dividend. Currently at 4313p (at time of writing).
• Shares -4% from 2019 highs; +20% from 2019 lows; +15.6% year-to date.
• All CFD positions held over 4.30pm on Weds, 6 Mar will be paid a dividend at 7:15am on Thurs, 7 Mar.
• Those using Rio Tinto CFDs receive the dividend 31 days earlier than those using shares.
• On the day the shares trade ex-dividend the share price tends to drop by the same amount.

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Trading Rio Tinto – An Example

Let’s say you like Rio Tinto and would like to get the 319.5p/7.2% dividend. You decide to buy exposure to £10,000 worth of Rio Tinto using a CFD, at the current price of 4313p. To do this, you need £2,000.

Shares that go ex-dividend typically fall by the amount of the dividend on the ex-dividend date. Many shares then tend to recover over a period of time, helped by dividends being reinvested, creating a dividend recovery trade opportunity.

Assuming Rio Tinto shares recover to their pre-dividend share price, your profit from the dividend would be £720, from your initial investment of £2,000.

Be aware that the share price could fall or rise, which could mean that you make an overall loss or increased profit on the position. For example, let’s assume that Rio Tinto falls 2% at the same time it pays the dividend. You overall net loss on your £10,000 position would be £200.

This is provided for information purposes only. It should not be taken as a recommendation.