The Motley Fool

Are Rio or BHP shares the better buy in 2020?

The Rio Tinto Ltd (ASX: RIO) share price is up 26.42% this year, compared to the 23.18% delivered by the S&P/ASX 200 Index (INDEXASX: XJO) in 2019.

But it isn’t just the benchmark Aussie index that Rio Tinto has outperformed this year. Rival miner BHP Group Ltd (ASX: BHP) shares are up just 13.51% in 2019 as iron ore markets have softened.

So, which one of these Aussie mining giants is better value in 2020?

BHP shares versus Rio shares in 2020

Both of the Aussie miners tend to move similarly, given the similar natures of their businesses.

However, Rio Tinto shares have climbed 13% higher than BHP this year, and 2020 could follow the same pattern.

BHP is much larger than Rio by market cap ($181 billion vs. $36 billion) but that hasn’t mattered in 2019.

BHP shares are yielding 5.02% compared to Rio’s 4.12% yield, which could make it more attractive for dividends in 2020.

However, BHP trades at a price-to-earnings multiple of 15.5x compared to Rio’s 8.3x multiple. That means in theory you are getting nearly double the earnings per dollar paid for Rio shares versus BHP.

Both companies are trading near the top of their 52-week ranges, which could be viewed positively or negatively. If you think there’s some momentum behind Rio, I’d say it could be a better buy than BHP shares in 2020.

Is either ASX mining stock in the buy zone?

While BHP shares look like worse value than Rio Tinto in 2020, I’m not sure either would be top of my ASX shopping list right now.

Mining is under pressure with the US–China trade war saga stretching into next year, which is why I think a stock like Harvey Norman Ltd (ASX: HVN) could be a better option.

Harvey Norman shares are yielding a tidy 7.61% and have climbed 39.61% higher in 2019.

These 3 high-yield ASX stocks below could also be in the buy zone as 2020 draws closer.

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.