Rio Tinto has a strong dividend outlook and pleasing project developments like Simandou and Oyu Tolgoi, though this may not be the ideal time to invest.
Owning Rio Tinto Ltd (ASX: RIO) shares has long been seen as an option for passive income, and today we're going to look at how big the dividends could be next year.
Rio Tinto is one of the world's largest miners, with significant operations focused on iron ore, copper and aluminium.
Changes in resource prices can lead to major improvements or declines in profitability, which can then affect the dividend payments.
While resource prices are challenging to forecast, we're going to take a look at what could happen with the upcoming dividends from the miner.
Potential Rio Tinto 2026 dividend payout
Rio Tinto is predicted by UBS to deliver investors a significantly larger payout in FY26 compared to the projected payout of US$3.97 per share in FY25.
UBS expects that the ASX mining share could provide shareholders with an annual dividend per share of US$5.15. That would represent a dividend payout ratio of 64% the potential earnings per share (EPS), with US$13.2 billion of net profit after tax (NPAT) and US$59.1 billion of revenue.
At the time of writing, that translates into a grossed-up dividend yield of 8.5%, including franking credits.
That means, if someone owned $10,000 of Rio Tinto shares, they'd receive approximately $850 of grossed-up dividend income, including franking credits, from the FY26 payouts.
Is this a good time to invest in the ASX mining share?
In a recent note after Rio Tinto's 2025 third quarter, UBS said that that the giant new iron ore project in Africa called Simandou is still set for first shipments "around Nov", with ore starting to move down the rail to the port in October.
UBS also said that Rio Tinto is benefiting from elevated iron ore prices (with the spot price at US$109 per tonne at the time of the note), as well as improving copper and aluminium prices. It expects the iron ore price to hold at around US$100 per tonne over the next six to nine months before "moderating to cost support" at around US$90 per tonne.
The broker said that the speed of the Simandou ramp-up in 2026 and 2027 will have a "material impact" on the iron ore market.
UBS also said the Mongolian copper project Oyu Tolgoi is ramping up and that's going well, but the potential change in the mine plan to the transfer of entree licences is a concern.
Rio Tinto is a commendable miner, but this may not be the best time to invest because the most appealing valuation normally appears when the iron ore price is suffering. I'd look at other opportunities today.