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The Rio Tinto Limited (ASX: RIO) share price has gone on a bit of a rollercoaster in 2022. Could the ASX mining share now be an opportunity?
Commodity business share prices can change quite rapidly according to price changes in their underlying resources.
Rio Tinto is involved with a number of different commodities though iron ore generates the lion’s share of net profit.
The ASX mining share has been rising in recent weeks. Since 10 May 2022, it’s up by more than 12%.
After the recent gains, we check whether the mining giant good value or not.
Broker ratings on the Rio Tinto share price
While it’s impossible to know what a share price will do in any given month, brokers have ratings on whether they think a miner is good value.
The broker UBS currently has a neutral rating on the miner, with a price target of $104. That implies a possible decline of around 10% over the next year. The broker doesn’t think the iron ore price will be as strong in the longer term so the mining giant’s growth could come from other commodities, such as copper and lithium.
According to UBS, BHP Group Ltd (ASX: BHP) would be a better choice.
Macquarie is more optimistic about Rio Tinto. It has a buy rating on the business with a price target of $135. That suggests a possible rise of 16% in the next year. The broker likes the copper opportunity for Rio Tinto with the Oyu Tolgoi project.
Ord Minnett rates Rio Tinto as a hold with a price target of $116. Part of the reason for the pessimism is the labour shortage facing the mining sector. Ord Minnett doesn’t think that Rio Tinto is going to stick to its guidance of shipments, with possible underperformance.
How big is the Rio Tinto dividend going to be?
Rio Tinto is known for paying big dividends, particularly when commodity prices are high. Resource businesses are renowned for their lower price/earnings (p/e) ratios, which have the effect of boosting their dividend yields.
UBS thinks that Rio Tinto is going to pay a grossed-up dividend yield of 13.2% in FY22 and 10.2% in FY23.
Macquarie is expecting even bigger dividends from Rio Tinto. At the current Rio Tinto share price, the broker thinks the FY22 grossed-up dividend yield could be 15.75% and 10.9% in FY23.
Ord Minnett thinks that Rio Tinto’s grossed-up dividend yield is going to be 14.8% in FY22 and 11.4% in FY23.
In the next two financial years, all of the brokers are expected double-digit yields from the ASX mining share.
Rio Tinto share price snapshot
Since the start of 2022, the Rio Tinto share price has gone up by 16%.