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Rio Tinto (RIO)

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scrumpyjack
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Re: Rio Tinto (RIO)

#430899

Postby scrumpyjack » July 28th, 2021, 10:15 am

yorkshirelad1 wrote:
scrumpyjack wrote:The interim dividend in GBP is 404.1p :D


and the share price has barely moved .... :-)


'twas expected.

Guess the final will be similar as the market expects about 800p for the year. Enjoy it while it lasts and BHP should be good too!

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Re: Rio Tinto (RIO)

#430990

Postby Turf » July 28th, 2021, 3:26 pm

this divi is obscene, thinking of selling up a couple of steady eddies ie NAT GRID, GLAXO combined 25k and lump on RIO collect Divi then take a view

Any thoughts ??

tjh290633
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Re: Rio Tinto (RIO)

#431008

Postby tjh290633 » July 28th, 2021, 5:54 pm

Turf wrote:this divi is obscene, thinking of selling up a couple of steady eddies ie NAT GRID, GLAXO combined 25k and lump on RIO collect Divi then take a view

Any thoughts ??

You have two weeks to make a move. Buy before 12th August and you can get a yield of about 7% for your trouble from the interim alone. The question is, what will you give up by missing the other dividends? What will you lose at XD? How will the price perform?

People have habitually bought shares Cum-Div and sold XD just to collect the dividends, but you can still lose out.

TJH

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Re: Rio Tinto (RIO)

#431027

Postby dealtn » July 28th, 2021, 6:49 pm

Turf wrote:this divi is obscene, thinking of selling up a couple of steady eddies ie NAT GRID, GLAXO combined 25k and lump on RIO collect Divi then take a view

Any thoughts ??


That the Dividend tail wags your Investment Dog.

scrumpyjack
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Re: Rio Tinto (RIO)

#431030

Postby scrumpyjack » July 28th, 2021, 7:02 pm

Turf wrote:this divi is obscene, thinking of selling up a couple of steady eddies ie NAT GRID, GLAXO combined 25k and lump on RIO collect Divi then take a view

Any thoughts ??


If you want to spend capital, then spend it. That's what you are doing if you do as you propose, and incurring dealing costs, market spread and stamp duty as well.

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Re: Rio Tinto (RIO)

#431039

Postby richfool » July 28th, 2021, 8:00 pm

Telegraph's Questor isn't so keen on RIO, making it an "Avoid" in the article of 25th July 2021, extract below, (behind a paywall):

As those profits suggest, this is a great time to be digging up iron ore. Its price rose by almost 85pc last year and the reason is not hard to find: China accounts for a huge percentage of the world’s steel production and its consumption of the alloy grew by 9pc last year.“Iron ore is at a fantastic price for the miners – it is dream time for them,” the manager of a natural resources fund told Questor. He said it was “boom time” in Western Australia – “all the mines are flat out, there is no labour availability, labour cost inflation is horrific”.

Despite this, Rio’s shares don’t look expensive. They have risen along with the iron ore price but yield a tempting 6.9pc if we include the special dividend. The free cash flow yield is in double figures.

Why? “The iron ore price is very high but the market doesn’t think this will continue. It’s literally as simple as that,” another resources investor said. “China accounts for the vast majority of demand and the Chinese are stimulating that side of their economy. No one knows when it will end – it’s a punt.”

Put another way, Rio’s share price ultimately depends on how many roads, airports and bridges the Chinese politburo decides to build. As if this were not already hard enough to predict, those decisions in turn depend on whether the Communist Party favours pursuing economic growth by promoting exports and infrastructure spending, the traditional route, or by encouraging consumer consumption. It has swung between the two in the past and may easily do so again.

Why would you tie your investment returns to the decisions of politicians in a country on the other side of the world, especially when you have little insight into how those decisions are made? Buying shares in Rio Tinto is a gamble pure and simple. Avoid.

Questor says: avoid

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Re: Rio Tinto (RIO)

#431054

Postby Turf » July 28th, 2021, 9:23 pm

tjh290633 wrote:
Turf wrote:this divi is obscene, thinking of selling up a couple of steady eddies ie NAT GRID, GLAXO combined 25k and lump on RIO collect Divi then take a view

Any thoughts ??

You have two weeks to make a move. Buy before 12th August and you can get a yield of about 7% for your trouble from the interim alone. The question is, what will you give up by missing the other dividends? What will you lose at XD? How will the price perform?

People have habitually bought shares Cum-Div and sold XD just to collect the dividends, but you can still lose out.

TJH


Thanks for the comments guys, I took the bait and did the deed, NAT grid collected divi anyway, Glaxo I have had for years and been disappointing although the figures today were encouraging. The RIO position is already in profit so we will see :)

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Re: Rio Tinto (RIO)

#434258

Postby Darka » August 12th, 2021, 8:42 am

6% drop this morning, but it's ex-dividend day so only to be expected.

No need to panic :D

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Re: Rio Tinto (RIO)

#434278

Postby spiderbill » August 12th, 2021, 10:02 am

Darka wrote:6% drop this morning, but it's ex-dividend day so only to be expected.

No need to panic :D


And yet it seems that people do. Now almost 8% down. I've lost count of the number of times I've seen that happen on an ex-div day, and sometimes for a few days after. Either there's a lot of dumb investors around or the automated share selling algorithms aren't as well programmed as they should be.

As it happens I have four important ex-divs today which many others here will have: Legal & General, Shell, and Greencoat UK Wind in addition to Rio. So to be only 500 quid down on my portfolio for the day is quite encouraging.

cheers
Spiderbill

scrumpyjack
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Re: Rio Tinto (RIO)

#434281

Postby scrumpyjack » August 12th, 2021, 10:11 am

spiderbill wrote:
Darka wrote:6% drop this morning, but it's ex-dividend day so only to be expected.

No need to panic :D


And yet it seems that people do. Now almost 8% down. I've lost count of the number of times I've seen that happen on an ex-div day, and sometimes for a few days after. Either there's a lot of dumb investors around or the automated share selling algorithms aren't as well programmed as they should be.

As it happens I have four important ex-divs today which many others here will have: Legal & General, Shell, and Greencoat UK Wind in addition to Rio. So to be only 500 quid down on my portfolio for the day is quite encouraging.

cheers
Spiderbill


One reason for this is income funds and investment trusts buying cum div and selling afterwards so they can keep up their distributable income from which to pay their dividends, even though it is value destroying.

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Re: Rio Tinto (RIO)

#434287

Postby Darka » August 12th, 2021, 10:25 am

spiderbill wrote:
Darka wrote:6% drop this morning, but it's ex-dividend day so only to be expected.

No need to panic :D


And yet it seems that people do. Now almost 8% down. I've lost count of the number of times I've seen that happen on an ex-div day, and sometimes for a few days after. Either there's a lot of dumb investors around or the automated share selling algorithms aren't as well programmed as they should be.

As it happens I have four important ex-divs today which many others here will have: Legal & General, Shell, and Greencoat UK Wind in addition to Rio. So to be only 500 quid down on my portfolio for the day is quite encouraging.

cheers
Spiderbill


Indeed, it's crazy - I would buy more but I have enough at the moment.

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Re: Rio Tinto (RIO)

#434290

Postby 77ss » August 12th, 2021, 10:37 am

spiderbill wrote:
Darka wrote:6% drop this morning, but it's ex-dividend day so only to be expected.

No need to panic :D


And yet it seems that people do. Now almost 8% down. I've lost count of the number of times I've seen that happen on an ex-div day, and sometimes for a few days after. Either there's a lot of dumb investors around or the automated share selling algorithms aren't as well programmed as they should be.

...
Spiderbill


Top up briefly considered. Until I did my sums.

The share price fall of 423p is only marginally more than the dividend of 404p.

Well within normal market noise.

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Re: Rio Tinto (RIO)

#434323

Postby spiderbill » August 12th, 2021, 12:42 pm

Darka wrote:Indeed, it's crazy - I would buy more but I have enough at the moment.


Yes, Rio and L&G are already too high a proportion of my income as it is otherwise I'd buy more, plus I don't have much spare cash in the ISA account at the moment. Was planning on buying more UK Wind though I see it's recovered most of the ex-div drop today already.

Spiderbill

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Re: Rio Tinto (RIO)

#434326

Postby spiderbill » August 12th, 2021, 12:46 pm

scrumpyjack wrote:One reason for this is income funds and investment trusts buying cum div and selling afterwards so they can keep up their distributable income from which to pay their dividends, even though it is value destroying.


That sounds a bit bizarre so I'm clearly not understanding something - wouldn't be the first time in financial matters :? Will go and read up about it, thanks.
Spiderbill

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Re: Rio Tinto (RIO)

#434330

Postby scrumpyjack » August 12th, 2021, 12:59 pm

spiderbill wrote:
scrumpyjack wrote:One reason for this is income funds and investment trusts buying cum div and selling afterwards so they can keep up their distributable income from which to pay their dividends, even though it is value destroying.


That sounds a bit bizarre so I'm clearly not understanding something - wouldn't be the first time in financial matters :? Will go and read up about it, thanks.
Spiderbill


The reason is that many funds and investment trusts market themselves as providing a high and reliable income. They can generally only distribute income as dividends and, in the case of ITs, must distribute at least 85%. So if a fund or IT does not have enough income (or accumulated reserves if an IT), one way to bolster their 'income' and maintain their dividend is to buy shares cum div and sell a day or two later ex div. Effectively they are turning capital into income.

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Re: Rio Tinto (RIO)

#434338

Postby absolutezero » August 12th, 2021, 1:11 pm

scrumpyjack wrote:
spiderbill wrote:
scrumpyjack wrote:One reason for this is income funds and investment trusts buying cum div and selling afterwards so they can keep up their distributable income from which to pay their dividends, even though it is value destroying.


That sounds a bit bizarre so I'm clearly not understanding something - wouldn't be the first time in financial matters :? Will go and read up about it, thanks.
Spiderbill


The reason is that many funds and investment trusts market themselves as providing a high and reliable income. They can generally only distribute income as dividends and, in the case of ITs, must distribute at least 85%. So if a fund or IT does not have enough income (or accumulated reserves if an IT), one way to bolster their 'income' and maintain their dividend is to buy shares cum div and sell a day or two later ex div. Effectively they are turning capital into income.

Where has this ITs must pay out 85% business come from?
Many ITs are very low yielding and pay nowhere near this.
Unless you mean REITs.

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Re: Rio Tinto (RIO)

#434343

Postby scrumpyjack » August 12th, 2021, 1:22 pm

ITs are required by UK legislation to distribute at least 85% of their income, otherwise they lose their Investment Trust status.

The dividend yield on many ITs is very low because the companies they have invested in either pay no dividend or a very small one. Scottish Mortgage's dividend is low for this reason, but they in fact distribute more than 100% of the dividends they receive as SMT shareholders have authorised them to pay dividends out of capital!

The Investment Trust (Approved Company) (Tax) Regulations 2011
The income distribution requirement
19.—(1) An investment trust must not retain in respect of an accounting period an amount which is greater than 15% of its income for the accounting period.

(2) The investment trust must distribute as a dividend the amount required to comply with paragraph (1) before the filing date for the investment trust’s company tax return for the accounting period.

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Re: Rio Tinto (RIO)

#435172

Postby absolutezero » August 16th, 2021, 4:41 pm

scrumpyjack wrote:ITs are required by UK legislation to distribute at least 85% of their income, otherwise they lose their Investment Trust status.

The dividend yield on many ITs is very low because the companies they have invested in either pay no dividend or a very small one. Scottish Mortgage's dividend is low for this reason, but they in fact distribute more than 100% of the dividends they receive as SMT shareholders have authorised them to pay dividends out of capital!

The Investment Trust (Approved Company) (Tax) Regulations 2011
The income distribution requirement
19.—(1) An investment trust must not retain in respect of an accounting period an amount which is greater than 15% of its income for the accounting period.

(2) The investment trust must distribute as a dividend the amount required to comply with paragraph (1) before the filing date for the investment trust’s company tax return for the accounting period.

Excellent.
I had seen the 85% figure thrown about but didn't know where it came from.
Now I do. Thanks.

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Re: Rio Tinto (RIO)

#435184

Postby GrahamPlatt » August 16th, 2021, 5:21 pm

Whether they are (well, OK, they are) duty bound to pay >=85% of their income in dividends, that in no way obliges them to buy cum-dividend and sell ex-dividend. They can just accept that their income is lower and pay a lower dividend (which is still over85%). The only thing which might colour their thinking is if they are wanting to maintain a reputation for increasing the dividend, but in that case (provided it is “income destroying” - and the jury’s out) it’d only be harder work in the years to come. Unless they pay from capital, and if they think in terms of “total return” (viz SMT) it doesn’t matter.

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Re: Rio Tinto (RIO)

#435189

Postby scrumpyjack » August 16th, 2021, 5:54 pm

GrahamPlatt wrote:Whether they are (well, OK, they are) duty bound to pay >=85% of their income in dividends, that in no way obliges them to buy cum-dividend and sell ex-dividend. They can just accept that their income is lower and pay a lower dividend (which is still over85%). The only thing which might colour their thinking is if they are wanting to maintain a reputation for increasing the dividend, but in that case (provided it is “income destroying” - and the jury’s out) it’d only be harder work in the years to come. Unless they pay from capital, and if they think in terms of “total return” (viz SMT) it doesn’t matter.


I agree it is an idiotic thing to do and I doubt ITs would do so because virtually all of them have accumulated reserves from previous years of not distributing the full 100%, so they can maintain their dividend record without engaging in such shenanigans. It is more likely to happen with 'Income' unit trusts as they are not allowed to build up income reserves. They distribute each year the net income received, no more no less. Yet another reason I never hold unit trusts and go for ITs instead.


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