Rio Tinto Ltd (ASX: RIO) shares have long been a popular option for income investors.
And it isn't hard to understand why.
The mining giant generates billions of dollars in free cash flow each year. It then uses this cash to reward its shareholders with dividend payments.
And while the size of the dividend may change regularly in response to commodity prices, the yields on offer with its shares are usually significantly greater than the market average.
This looks set to be the case again in 2024 following the release of the miner's full-year results.
Last week, Rio Tinto's board released its results and declared a fully franked final dividend per share of US$2.58 per share (A$3.96 per share). This was a 14.7% increase on the prior corresponding period and brought its full-year dividend to US$4.35 per share (A$6.67 per share).
Based on the latest Rio Tinto share price, this equates to yields of 3.2% for its final dividend and 5.4% for the full year.
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But what's next for the Rio Tinto dividend?
The good news for income investors is that there could be bigger dividends to come from Rio Tinto in the coming years.
According to a note out of Goldman Sachs, its analysts are now forecasting a modest increase to US$4.39 per share (A$6.73 per share) in FY 2024. This will mean a fully franked 5.45% dividend yield for investors.
A larger increase is expected in FY 2025, with Goldman expecting the miner to pay out US$4.61 per share (A$7.07 per share). If this proves accurate, it would mean a yield of 5.7% for investors.
Finally, in FY 2026, the broker expects the Rio Tinto dividend to be trimmed to US$4.55 per share (A$6.98 per share). This will still mean an attractive fully franked 5.65% dividend yield.
Goldman Sachs has a buy rating and $138.30 price target on the miner's shares.
