The Rio Tinto Limited (ASX: RIO) share price tumbled with the rest of the market on Thursday.
The mining giant's shares fell almost 4% to end the day at $115.35.
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Is this a buying opportunity?
One leading broker that sees the weakness in the Rio Tinto share price as a buying opportunity is Goldman Sachs.
According to a note, this morning the broker retained its buy rating and lifted its price target on the miner's shares to $131.50. Based on the current Rio Tinto share price, this implies potential upside of 14% over the next 12 months.
But Rio Tinto is of course a big dividend payer, so the returns don't stop there. Goldman has pencilled in a US$9.30 per share (~A$12.90 per share) fully franked dividend in FY 2022.
So, with the Rio Tinto share price fetching $115.35 at present, this equates to a massive yield of 11.2%, bringing the total return to over 25%.
What did Goldman say about the Rio Tinto share price?
Goldman commented: "Our 2022/2023/2024 EPS up 2%/4%/6% on incorporating our commodity team's recent aluminium price upgrades, which has more than offset increases to our unit cost assumptions across most divisions due to our expectations of ongoing industry cost inflation."
"Despite ongoing operational issues and concerns over future growth (Pilbara heritage and replacement mines, Simandou, Oyu Tolgoi, Resolution) and uncertainty over decarbonisation capex, we rate RIO a Buy.".
The broker then highlighted five key reasons for its bullish view on the Rio Tinto share price.
These are its attractive valuation (1x NAV and 4x FY22 EBITDA), strong free cash flow and dividend yield, positive near term iron ore outlook, a return to production growth in FY 2022, and its compelling low emission aluminium exposure.
All in all, the broker sees Rio Tinto as a top option in the resources sector right now.
