RIO Dividend Type Payments

Rio Tinto Plc dividend

Although RIO has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Rio Tinto Plc to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):

Rio Tinto Plc (RIO)
Bid Ask Last Change Volume P/E Market Cap
54.00 56.00 54.87 -0.74 4.3M - 77B

RIO Dividend-Like Income Using Covered Calls

With RIO at 54.87, here's a table showing how big the annual "dividend" (i.e. total annual call premium received) would need to be to attain 3%, 5%, and 10% annual yields. Also shown is the equivalent number of cents/day necessary to achieve each yield:

Annual Yield Annual Premium Cents/Day
3% 1.65 0.5
5% 2.74 0.8
10% 5.49 1.5

So now we need to find out of the money covered calls that pay at least the prescribed cents/day amount of time premium. That will generate income and, because they are out of the money, leave room for some upside potential on the stock. Here are some examples:

3% Yield On RIO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 57.50 1.35 128 1.1 1.50 (2.7%)
May 16 57.50 0.65 37 1.8 1.50 (2.7%)
5% Yield On RIO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 57.50 1.35 128 1.1 1.50 (2.7%)
May 16 57.50 0.65 37 1.8 1.50 (2.7%)
10% Yield On RIO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 16 57.50 0.65 37 1.8 1.50 (2.7%)
Apr 17 57.50 0.30 8 3.8 1.50 (2.7%)

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