The Rio Tinto Limited (ASX: RIO) share price has been a positive performer in recent weeks.
Since this time three weeks ago, the mining giant's shares have stormed 11% higher.
This means the Rio Tinto share price is now up 22% over the last six months.
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Can the Rio Tinto share price keep rising?
The good news is that one leading broker believes there's still room for the Rio Tinto share price to keep rising.
According to a note out of Goldman Sachs, its analysts have a buy rating and $135.10 price target on miner's shares.
Based on the current Rio Tinto share price of $114.49, this implies potential upside of 18% for investors over the next 12 months.
In addition, Goldman is forecasting big dividends from the company over the next two years. It expects fully franked dividend yields greater than 10% in FY 2022 and FY 2023.
What did the broker say?
While Goldman acknowledges that there are a few risks to consider, overall it appears to believe the risk/reward on offer is compelling. It commented:
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.
This is based on its attractive valuation, strong free cash flow, the strong iron ore outlook, production growth potential, and its compelling low emission aluminium exposure.
Goldman commented:
Rio is a FCF story in our view, however, and we see the company returning to growth in 2022 & 2023 with a c.3% and 5% increase in Cu Eq production driven mostly by iron ore copper.
In addition to copper production growth, Rio has one of the highest margin, lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think ELYSIS inert anode technology could be worth billions of $. Aluminium will contribute 20% of RIO's group EBITDA and generate US$3bn of FCF in 2022 on our estimates.
