8% dividend yield! A cheap FTSE 100 share I’d buy

I’m searching for the best FTSE 100 dividend shares to buy for my portfolio. I think this cheap UK stock could be just what I’m looking for.

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Scene depicting the City of London, home of the FTSE 100

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I believe Rio Tinto (LSE: RIO) could thrive as the world embarks on a new commodities ‘supercycle’. Rapid industrialisation and urbanisation in emerging markets looks set to supercharge demand for Rio’s raw materials like iron ore, aluminium and copper.

Rising awareness of climate change, and with it booming sales of electric vehicles and huge investment in renewable energy, should also significantly boost commodities consumption.

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I can get exposure to a possible price boom by purchasing a commodities-backed financial instrument. The United States Copper Index Fund for example is an exchange-traded fund (ETF) which rises in value when copper prices increase.

However, ETFs like this won’t pay out a dividend, unlike some UK mining shares like Rio Tinto. And boy does Rio offer attractive dividends right now. Its yield for 2022 sits at a mighty 8%.

Too cheap to miss?

An advantage of me owning that copper-backed ETF is that it insulates me from the perils of commodities production. On the other hand, the value of Rio Tinto’s shares could slump if production stoppages occur, hitting revenues hard and driving up costs. These sorts of dangers can be commonplace in the mining industry.

Still, I think the pull of that big dividend overshadows the possibility of these ever-present dangers. Besides, I think Rio Tinto’s high-quality asset base makes it an investment worth owning for the commodities boom. Its Oyu Tolgoi project in Mongolia, for instance, is tipped to be the world’s fourth-biggest copper mine by 2030.

Today, Rio Tinto trades at £54 per share. This leaves the FTSE 100 firm trading on a forward price-to-earnings (P/E) ratio of just 8.5 times that makes it good value, I believe. This stock’s not without risk, particularly as commodity prices could suffer if supply from other major producers soars. But I think Rio’s current valuation still makes it attractive on a risk/reward basis.

Another FTSE 100 dividend star I’d buy

Like Rio Tinto, Ashtead Group (LSE: AHT) could benefit massively from strong infrastructure spending over the coming decade. I own Ashtead in my own shares portfolio and, like its FTSE 100 counterpart, I also think Ashtead offers supreme value for money today. At £57.50 per share, the rental equipment business trades on a forward price-to-earnings growth (PEG) ratio of 0.6.

However, earnings could slip if economic conditions worsen and the construction sector toils. But the company has a strong track record of outperforming the market and this gives me supreme confidence. I’m expecting revenues generation to remain impressive too, as its strong balance sheet allows it to continue growing its business through acquisitions.

I also bought Ashtead because of its exceptional dividend history. The company has raised dividends every year since the mid-2000s, thanks to its impressive cash generation. Its 1.1% forward yield might not be the biggest. But as a long-term investor, I’m happy to overlook this and concentrate on the possibility of strong and sustained payout growth long into the future.

This could well help me to retire in comfort.

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Royston Wild owns Ashtead Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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