Rio Tinto Limited (ASX: RIO) shares fell 4% on Thursday after the mining company went ‘ex-dividend‘.

Rio Tinto is a $124 billion iron ore, copper, aluminium and coal mining company. Like BHP Billiton Limited (ASX: BHP), Rio Tinto has operations around the globe but one of its key assets is its iron ore operations in Western Australia.

Rio Tinto Goes ‘Ex-Dividend’

If a shareholder own shares on the day before the ex-dividend date, they will get the next dividend.

The ex-dividend date is typically one day before the record date, which is the date the company determines who the shareholders are and how much they will receive in dividends.

So why do shares fall?

It’s not guaranteed that shares will fall. However, if Rio Tinto, for example, pays its $2.28 per share final dividend to shareholders in theory it means the company has $2.28 less in cash today than it did yesterday.

Therefore, in theory, the shares should be priced less today than yesterday.

But it doesn’t always work that way.

What Are Dividends?

Source: raskfinance.com

More Rio Dividends On The Horizon

In January, while presenting the group’s production report, Rio Tinto’s CEO J-S Jacques, said:

Our focus on value over volume and mine-to-market productivity, along with disciplined allocation of cash, will ensure that we continue to deliver superior shareholder returns in the short, medium and the long term.

In February during the financial results announcement, Rio Tinto released its results to the market and said it would pay a record full year dividend equivalent to $5.2 billion and undertake a $1 share buyback.

In late February Rio Tinto received a binding offer for its aluminium assets in Iceland, Netherlands and Sweden valued at $345 million. “The binding offer for the sale of these assets provides further evidence of Rio Tinto’s commitment to strengthen our business and deliver value by streamlining our portfolio,” Rio Tinto Aluminium chief executive Alf Barrios said. 

Rio Tinto shares were trading 4% lower at $77.90 on Thursday.

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