Is the Rio Tinto (ASX:RIO) share price a buy for its 21% dividend yield?

Rio Tinto shares may be able to offer a large dividend yield.

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The Rio Tinto Limited (ASX: RIO) share price could be a consideration for its projected grossed-up dividend yield of 21%.

That dividend projection is from the broker Credit Suisse, which thinks that Rio Tinto is going pay a large dividend for the miner's 2021 financial year. Rio's FY21 follows the 2021 calendar year, so this current financial year will show the benefit of the strong iron ore prices a few months ago.

The broker thinks that investors will continue to be interested in Rio Tinto because of its ongoing good payments to shareholders.

Less rosy picture for FY22

Each analyst has their own expectations for what Rio Tinto's FY22 will look like.

Credit Suisse is expecting the Rio Tinto dividend yield to fall to 10.9% in FY22 as profit returns to a lower level.

The broker puts the current Rio Tinto share price at 8x FY22's estimated earnings.

Rio Tinto's falling share price

Over the last six months, Rio Tinto shares are down by around 33%. In the last month alone it has dropped around 13%.

Under a month ago, the business released its third quarter production results. Despite the challenges of COVID-19, Rio Tinto noted that its iron ore shipments of 83.4mt were 2% higher year on year and 9% higher than the second quarter of 2021.

Within that update, Rio Tinto said that it's expecting Pilbara shipments to be between 320mt to 325mt, down from the previous guidance of being at the low end of 325mt to 340mt. This was due to "modest delays" to completing the new greenfield mine at Gudai-Darri and the Robe Valley brownfield mine replacement project due to the tight labour market in Western Australia.

However, production of bauxite, aluminium, copper and titanium dioxide slag were all lower than the third quarter of 2020.

Rio Tinto has also entered into three partnerships to progress its work to decarbonise its value chain, such as zero-emission mining haulage solutions.

Lithium project

In July 2021, Rio Tinto announced that it had committed $2.4 billion to the Jadar lithium-borates project in Serbia, one of the world's largest greenfield lithium projects. If approved, this project could have a growing influence on the Rio Tinto share price in the coming years.

It still remains subject to receiving all relevant approvals, permits and ongoing engagement with local communities and the Government of Serbia.

Rio Tinto is looking to increase its exposure to battery materials that are used in large scale batteries for electronic vehicles and storing renewable energy. This would position Rio Tinto as the largest source of lithium supply in Europe for at least the next 15 years. Rio Tinto also said Jadar will produce borates, which are used in solar panels and wind turbines.

First saleable production is expected in 2026, at a time of "strong market fundamentals" with lithium demand forecast to grow by 25% to 35% per annum over the next decade. At full production in 2029, the mine is expected to produce around 58,000 tonnes of lithium carbonate annually.

Rio Tinto share price target

Credit Suisse has put a price target of $106 on Credit Suisse, which is a potential upside of around 20% over the next 12 months, if the broker is right.

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