How does the Rio Tinto (ASX:RIO) dividend compare to the materials sector?

The Rio Tinto Limited (ASX: RIO) share price certainly has been a strong performer over the last 12 months. Since …

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The Rio Tinto Limited (ASX: RIO) share price certainly has been a strong performer over the last 12 months.

Since this time in 2020, the mining giant's shares have risen an impressive 26%.

Despite this, Rio Tinto shares are still expected to provide investors with double digit dividend yields in the near term. This makes it one of the more generous dividend payers in the materials sector.

A woman holds a lightbulb in one hand and a wad of cash in the other

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What dividends are expected from Rio Tinto in the near term?

According to a recent note out of Goldman Sachs, its analysts are forecasting some big fully franked dividends in the near term.

Goldman is expecting dividends per share of US$13.40 in FY 2021, US$12.50 in FY 2022, and then US$10.90 in FY 2023.

Based on current exchange rates and the latest Rio Tinto share price of $128.26, this will mean yields of 14.2%, 13.3%, and 11.6%, respectively.

In addition, Goldman Sachs has a buy rating and $147.50 price target on Rio Tinto's shares. This represents potential upside of 15% over the next 12 months before dividends.

How does the Rio Tinto dividend compare to its peers?

The Rio Tinto dividend compares reasonably favourably to what's on offer from its peers.

For example, Goldman Sachs is forecasting BHP Group Ltd (ASX: BHP) to pay fully franked dividends per share of US$2.89 in FY 2021, US$4.46 in FY 2022, and US$4.00 in FY 2023.

Based on the current BHP share price of $52.04, this implies yields of 7.5%, 11.6%, and then 10.5%, respectively, over the three-year period.

Goldman Sachs also has a buy rating on BHP shares. Its price target currently stands at $57.70, representing potential upside of almost 11%.

What about others?

Finally, another popular option in the sector for dividends is Fortescue Metals Group Limited (ASX: FMG).

Goldman is forecasting dividends per share of US$2.70 in FY 2021, US$2.64 in FY 2022, and then US$1.48 in FY 2023. This will mean yields of 16.2%, 15.9%, and 8.9%, respectively.

However, Goldman isn't anywhere near as positive on Fortescue's shares and actually has a sell rating and $19.90 price target on them.

Based on this, the Rio Tinto dividend is arguably the best option out of the three. Particularly when you factor in the potential share price gains as well.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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