Are you looking for options in the mining sector? If you are, you might want to consider the two ASX 200 mining shares listed below.
Both have recently been named as buys by brokers and tipped to provide an attractive combination of capital returns and dividends.
Here's what you need to know about them:
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Mineral Resources Ltd (ASX: MIN)
Morgans remains very positive on Mineral Resources. It is a mining and mining services company which has exposure to lithium, iron ore, and energy.
The broker currently has the company on its best ideas list with an add rating and $103.00 price target. This compares favourably to the latest Mineral Resources share price of $73.39. In addition, its analysts are expecting a $5.59 per share dividend in FY 2024. This equates to a massive 7.9% dividend yield at current prices.
Morgans commented:
MIN is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade. Also helping our investment view is that MIN's diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. We see MIN's lithium / iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H'CY23. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.
South32 Ltd (ASX: S32)
Another ASX 200 mining share that has been named as a buy is South32. It is a diversified miner with a portfolio of world class operations across many commodities such as aluminium and copper.
Goldman Sachs is a fan of the company and recently upgraded its shares to a buy rating with a $4.90 price target. This compares favourably to the current South32 share price of $4.06.
In addition, the broker is expecting a 60 cents per share dividend in FY 2024, which would mean a whopping dividend yield of 14.8% for investors.
Goldman Sachs explained its bullish stance. It said:
We upgrade S32 to Buy (from Neutral) on attractive valuation: Trading at ~0.95xNAV (A$4.6/sh) and on an implied TSR of ~29%, and an attractive NTM EV/EBITDA multiple of ~2.1x vs. the sector average of 4.5x. We assume the share buyback continues (at ~US$250mn p.a) and S32 pays out 50% of earnings (40% ordinary, 10% special dividend component) with the FY23 full year result. On our estimates, S32 is on a supportive dividend yield of c. 5% in FY23, increasing to 14% in FY24.
