How big will the Rio Tinto dividend be in 2022?

Let's analyse and find out.

| More on:
A woman looks quizzical while looking at a dollar sign in the air.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Rio Tinto is one of the most generous dividend paying shares on the ASX but its payout has peaked 
  • Analysts are tipping a cut to the record $5.3 billion dividend it paid in 2021, with further cuts over the next few years 
  • But some brokers are not perturbed and they think the Rio Tinto share price is still an attractive buy 

Iron ore giant Rio Tinto Limited (ASX: RIO) is likely to cut its 2022 dividend after paying a whopping $5.3 billion payout to shareholders in the last financial year.

But the miner will remain one of the best dividend yielding shares on the S&P/ASX 200 Index (ASX: XJO), according to brokers' forecasts.

Conditions were perfect for Rio Tinto to pay a record regular and special dividend of US$10.40 ($14.23) a share in FY2021. This is thanks to high iron ore prices and relatively low capex requirements.

Rio Tinto's 2022 dividend cut

Many of the tailwinds remain and cash is still spilling out of its coffers – although at a slower pace. This means Rio Tinto's dividends have probably peaked – at least for the next few years.

The analysts at Macquarie Group Ltd (ASX: MQG) are forecasting a dividend payment of US$9.38 for the financial year.

While that represents a close to 10% cut to the FY2021 dividend, the 20% tumble by the Rio Tinto share price means its shares are sitting on a dividend yield of around 13% for financial year 2022 (on today's exchange rate).

Throw in franking credits and this lifts its gross yield to 19%.

Will Rio Tinto appeal to income investors?

But ASX mining shares don't typically make good income shares as their dividends can be volatile.

This is certainly the case for Rio Tinto. The expected easing in the iron ore price from its current elevated levels will see its dividend continue to fall.

Macquarie is forecasting Rio Tinto's dividend to come in at US$6.52 per share in FY2023 and US$5.58 in the following year.

Varying dividend forecasts

However, Credit Suisse is more cautious in its assumptions. The broker is tipping the 2022 Rio Tinto dividend of US$7.72 a share. This puts the miner's dividend yield at 10.7% if franking credits are included.

Credit Suisse's lower dividend estimate is based on its more sombre outlook for Rio Tinto's earnings. The broker is forecasting adjusted earnings per share (EPS) of US$9.58 when consensus is standing at US$12.08.

Is Rio Tinto a good dividend share to buy in 2022?

Nonetheless, the Rio Tinto share price still represents good value, according to Credit Suisse. It is recommending the shares as outperform with a 12-month price target of $138 a share.

Macquarie is also upbeat about the miner. It too rates the Rio Tinto share price as outperform with a 12-month price target of $140 a pop.

Motley Fool contributor Brendon Lau has positions in Macquarie Group Limited and Rio Tinto Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
Dividend Investing

With a 5% dividend yield, why I think this leading ASX share is a buy

I think this business offers pleasing income with potential capital gains too.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

3 top ASX dividend shares for income investors to buy

Analysts have good things to say about these income options.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

Why this is one of my top ASX dividend shares to buy in June

This ASX dividend share provides everything I’m looking for.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Forget Westpac and buy these ASX dividend shares

Let's see what analysts are saying about these income options.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Brokers say Harvey Norman and these ASX dividend stocks are buys

Let's see what brokers are recommending as buys for income investors.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

Analysts say these ASX dividend stocks are top buys for income investors

Let's see which stocks are being tipped as buys.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 4% to 11% yields

Analysts expect these buy-rated shares to offer great dividend yields.

Read more »