If I invest $10,000 in Rio Tinto shares how much passive income will I receive?

Is Rio Tinto a good option for income seekers? Let's find out.

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Rio Tinto Ltd (ASX: RIO) shares are a popular option for investors looking for a source of passive income.

That's because every year the mining giant rewards its shareholders with billions of dollars in dividends.

But will this be the case in 2024? Let's have a look and find out what a $10,000 investment in Rio Tinto shares could provide.

Passive income from Rio Tinto shares

Firstly, Rio Tinto shares ended the week at $117.73. This means that a $10,000 investment would result in your owning 85 units.

But what passive income would those shares generate? Well, it's worth remembering that Rio Tinto has already paid its interim dividend for FY 2023, so it is too late to receive that one. It paid out 177 US cents to shareholders in September.

So, the next dividend on the agenda is its final dividend, which will be declared in February and then paid in March.

According to a note out of Goldman Sachs, it expects the miner to declare a fully franked US$2.09 (A$3.30) per share final dividend. This will bring its full-year dividend to US$3.86 (A$6.09) per share.

Based on our 85 units, this final dividend will generate a passive income of $280.50 for investors.

More income on the way

The income won't stop there. We can now look forward to another dividend being declared in August.

Goldman is forecasting total fully franked dividends of US$3.71 (A$5.85) per share for FY 2024. If we assume that this means an interim dividend of A$2.92, then we can expect to receive further passive income of $248.20 in our bank accounts in September.

All in all, this means a total income of $528.70 for investors over the next 12 months.

Don't forget the upside potential

Goldman Sachs currently has a buy rating and a $126.50 price target on Rio Tinto's shares.

If its shares were to reach that level, our 85 units would have a market value of $10,752.50.

That's a $752.50 capital return on top of the $528.70 passive income. Not too bad if you ask me!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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