As well as being one of the biggest miners in the world, Rio Tinto Ltd (ASX: RIO) is also one of the biggest dividend payers.
Every year, the mining giant shares a large portion of its profits with its grateful shareholders.
This has seen tens of billions of dollars handed out in passive income over the last few years.
For example, in FY 2021, the miner's dividend totalled US$16.8 billion, whereas in FY 2022 a total of US$8 billion was dished out to shareholders.
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What's next for the Rio Tinto dividend?
The good news for investors is that Rio Tinto continues to operate with the same dividend policy that has been in place since 2016. In its last annual report, it commented:
Our shareholder returns policy dates back to 2016. We have committed to returning 40% to 60% of underlying earnings on average through the cycle, with additional returns in periods of strong earnings and cash generation. Over the past seven years, we have paid out at the top end of the range, at 60% for the ordinary dividend, in each year.
We have remained very consistent with our shareholder returns policy, with the payout ratio giving us some flexibility with regard to the macro-economic environment. It remains a core part of our equity story, which we see as paramount for maintaining discipline. Our financial strength means that we can reinvest for growth, accelerate our decarbonisation and continue to pay attractive dividends through the cycle.
Over at Goldman Sachs, its analysts expect this to lead to the mining behemoth rewarding its shareholders with a full-year dividend of US$5.37 (A$8.24) per share in FY 2023 and then US$4.62 (A$7.09) per share in FY 2024.
Based on the current Rio Tinto share price of $107.77, this will mean very attractive dividend yields of 7.6% and 6.6%, respectively.
Goldman also sees potential for material upside from Rio Tinto's shares with its buy rating and $136.10 price target.
