Rio Tinto Limited (ASX: RIO) shares are known for paying large dividends to investors. Could it be one of the most rewarding S&P/ASX 200 Index (ASX: XJO) shares in 2024?

One of the main advantages of ASX mining shares for income-seekers is that they trade on a relatively low price/earnings (p/e) ratio. The lower the p/e ratio, the higher the dividend yield is, assuming the dividend per share and dividend payout ratio don’t change.

Firstly, let’s have a look at what dividend yield Rio Tinto shares may be paying in FY24.

Projected Rio Tinto dividend yield

When the share price falls, it boosts the prospective dividend yield, so the 11% fall for Rio Tinto shares (that we can see on the chart below) is helpful for potential investors that want a good payout.

With the iron ore price now at around US$105 per tonne, down from US$130 per tonne earlier this year, Rio Tinto’s monthly profitability may be lower over the rest of the year and in 2024.

Even so, the ASX mining share is predicated (according to Commsec) to pay a solid grossed-up dividend yield of 8.9% in FY24 after paying a grossed-up dividend yield of 9.7% in FY23. By most measures, that’d be a really rewarding annual payment by the business.

How does it compare to some of the other ASX 200 dividend shares – is it better?

ASX 200 share comparisons

Rio Tinto’s dividend yield is expected to be larger than some of the well-known blue chips like Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA).

In FY24, these could be the following grossed-up dividend yields from the ones I just named, according to projections on Commsec:

Telstra could pay a grossed-up dividend yield of 5.9%.

Wesfarmers might pay a grossed-up dividend yield of 5.4%.

Woolworths is projected to pay a grossed-up dividend yield of 4.3%.

CBA could pay a grossed-up dividend yield of 6.4%.

Clearly, Rio Tinto is going to pay a bigger dividend yield than the above ASX 200 shares. But, the other large ASX iron ore shares and several ASX 200 bank shares could be on course to pay a larger dividend yield in 2024. Commsec numbers suggest that for FY24:

BHP Group Ltd (ASX: BHP) could pay a grossed-up dividend yield of 8.9%.

Fortescue Metals Group Ltd (ASX: FMG) might pay a grossed-up dividend yield of 8.9%.

It might be unsurprising that the three major iron ore miners all face similar valuation changes and dividend payout movements as the iron ore price fluctuates. Now let’s look at some banks.

Westpac Banking Corp (ASX: WBC) may pay a grossed-up dividend yield of 9.8%.

ANZ Group Holding Ltd (ASX: ANZ) could pay a grossed-up dividend yield of 9.7%.

National Australia Bank Ltd (ASX: NAB) might pay a grossed-up dividend yield of 8.9%.

Bendigo and Adelaide Bank Ltd (ASX: BEN) is projected to pay a grossed-up dividend yield of 10.1%.

Foolish takeaway

Rio Tinto could be one of the stronger-yielding ASX 200 shares in 2024, though some banks could pay even higher yields.

The ASX mining shares don’t have much control over what commodity prices do, so it’s just a guess at this stage. Rio Tinto’s profit next year could be stronger, or weaker, than what investors are expecting.

But the long-term future for the company looks promising as it invests in copper and lithium.

The post Are Rio Tinto shares a strong ASX 200 option for dividends in 2024? appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs says these ASX 200 mining giants are buys
• Experts say these 2 ASX 200 dividend stocks are buys for passive income
• What’s going on with Rio Tinto shares and lithium?
• Bought $5,000 worth of Rio Tinto shares last February? Guess how much passive income you’ve already grabbed?
• How does the Fortescue dividend stack up against BHP and Rio?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank, Telstra Group, and Wesfarmers. 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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