Which Shares Should I Buy in April: BHP or Rio Tinto?

When considering investments in the mining sector, two prominent names immediately come to mind: BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO). But are these mining giants currently in the prime zone for investment?


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Analyst Insights

Delving into the insights provided by analysts at Goldman Sachs, it appears that both BHP and Rio Tinto, along with ASX mining stocks, emerge as strong contenders for investors, particularly ahead of their upcoming quarterly updates. While Goldman Sachs leans slightly towards Rio Tinto, it still perceives BHP shares as presenting an attractive risk/reward proposition, making all three companies compelling options for consideration in the current market landscape.

BHP Group Ltd.

Goldman Sachs maintains a buy rating on BHP shares, albeit with a marginally reduced price target of $49.20. This implies a potential upside of nearly 10% from current levels. Additionally, the broker forecasts fully franked dividend yields of 4.8% in FY 2024 and 4.3% in FY 2025. This could translate to a total potential 12-month return exceeding 14% for investors acquiring BHP shares at their current valuation.


The positive stance on BHP stems from several factors, including its attractive valuation and promising production growth prospects. The firm highlights that BHP's valuation, although premium to Rio Tinto, remains appealing. Additionally, Goldman Sachs expresses optimism regarding copper and metallurgical coal, identifying these sectors as areas of potential growth for BHP.

Rio Tinto Ltd.

Goldman Sachs maintains its preference for Rio Tinto shares (ASX:RIO), affirming a buy rating alongside an upgraded price target of $140.20. This suggests a potential upside of 14% from current levels. Moreover, with forecasted fully franked dividend yields of 5.4% in FY 2024 and 5.7% in FY 2025, investors could potentially reap a total return exceeding 19% over the next 12 months, provided Goldman's analysts' recommendations prove accurate.


The broker enumerates five compelling reasons to favor Rio Tinto shares, including its relative valuation compared to peers, strong free cash flow, anticipated production growth, potential for improvement in operations, and its low-emission aluminium business. These factors collectively contribute to Rio Tinto's attractiveness as an investment option.


In conclusion, both BHP Group Ltd and Rio Tinto Ltd emerge as promising investment opportunities, each with its unique strengths and growth prospects. Investors should consider their risk appetite and investment objectives before making a decision.
Location: Australia

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