The mining sector is a great place to look for big dividends. Thanks to the strong cash generation and penchant for returning funds to shareholders, a number of ASX 200 mining shares offer attractive forecast dividend yields.
Two such examples are listed below. Here's why these ASX 200 mining shares could be buys for their dividends:
Pilbara Minerals Ltd (ASX: PLS)
The first ASX 200 mining share that could be a buy for dividends is lithium miner Pilbara Minerals.
Analysts at Macquarie are very positive on the company and recently reaffirmed their outperform rating on its shares. The broker highlights that the miner is generating significant free cash flow from its operations, which it expects to support some big dividends.
For example, the broker is forecasting fully franked dividends per share of 42 cents per share dividend in FY 2023 and a 30 cents per share dividend in FY 2024. Based on the latest Pilbara Minerals share price of $4.10, this equates to yields of 10.2% and 7.3%, respectively.
Macquarie also sees material upside for Pilbara Minerals' shares. It has an outperform rating and lofty $7.70 price target on them.
Rio Tinto Ltd (ASX: RIO)
Rio Tinto could be another great ASX 200 mining share to buy now for dividends.
That's the view of analysts at Goldman Sachs. They believe the mining giant's shares are great value compared to rivals. This is particularly the case given its production growth, and free cash flow improvement potential.
Goldman also highlights that Rio Tinto has the "[w]orld's highest margin low emission aluminium business" and sees it as a key earnings (and dividends) contributor in the future.
In the meantime, the broker is forecasting fully franked dividends per share of US$5.36 (A$8.07) in FY 2023 and then US$4.68 (A$7.05) in FY 2024. Based on current exchange rates and the latest Rio Tinto share price of $112.26, this will mean yields of 7.2% and 6.3%, respectively.
Goldman Sachs has a buy rating and $136.20 price target on its shares.
