Fortescue share price pushes higher after declaring huge FY 2020 dividend

The Fortescue Metals Group Limited (ASX:FMG) share price is pushing higher today after delivering a very strong FY 2020 result and big dividend…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher after the release of its full year results.

At the time of writing the iron ore producer's shares are up 2% to $18.36.

How did Fortescue perform in FY 2020?

Fortescue certainly was on form in FY 2020 and delivered record shipments, revenue, earnings, and cashflow over the 12 months. Management advised that this reflects the successful execution of its integrated operations and marketing strategy, and strong customer demand.

For the 12 months ended 30 June 2020, Fortescue posted a 29% increase in revenue to US$12,820 million. This was driven by shipments of 178.2 million wet metric tonnes and a 21% lift in its average realised price to US$78.62 a tonne.

And combined with a small decrease in its C1 costs to US$12.94 per tonne, its earnings grew even quicker. Fortescue's underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 38% to US$8.4 billion.

On the bottom line, the mining giant's net profit after tax lifted 49% to US$4.7 billion or US$1.54 (A$2.29) per share.

Bumper dividend for shareholders.

Fortescue continued to generate strong underlying cashflows during the year. Net cash from operating activities came in at US$6.4 billion, up 47% on FY 2019's result.

Together with its strong balance sheet, this allowed the Fortescue board to declare a fully franked final dividend of A$1.00 per share. Combined with its interim dividend of 76 Australian cents per share, Fortescue has increased its full year dividend by 54% to A$1.76 per share in FY 2020. This represents a 77% payout ratio of FY 2020 net profit after tax, which is consistent with its policy of a payout ratio of 50 to 80% of net profits.

To be eligible for this dividend, investors will need to own its shares before the ex-dividend date of 31 August. It will then be paid to eligible shareholders on 2 October.

FY 2021 guidance.

In FY 2021 the company is expecting a similar level of iron ore shipments. It has provided guidance of 175 to 180 million tonnes.

It is also forecasting flat to marginally higher costs of US$13.00 to US$13.50 per tonne. This is based on an exchange rate of 70 U.S. cents.

Capital expenditure is forecast to be US$3 billion to US$3.4 billion. This is inclusive of US$1 billion of sustaining, operational, and hub development capital, US$140 of exploration expenditure, and US$1.9 billion to US$2.3 billion for major projects. The latter includes its Eliwana, Iron Bridge, and Energy projects.

Should you invest $1,000 in Csr right now?

Before you buy Csr shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Csr wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Boss Energy, Capstone, Dimerix, and Platinum shares are storming higher today

These shares are having a good finish to the week. Let's find out why.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was the ASX's fourth day of gains for the week today.

Read more »

a man raises his fists to the air in joyous celebration while learning some exciting good news via his computer screen in an office setting.
Share Gainers

Why Cedar Woods, Healius, NextDC, and Platinum shares are charging higher today

These shares are rising on Thursday. But why are investors buying them? Let's find out.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Share Gainers

These were the best-performing ASX 200 shares in April

These shares were in fine form in April. Let's see why they outperformed.

Read more »

Hiker man backpacker with hands up in the summer mountains with cloudy sky.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX made it three from three.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Share Gainers

Why Cedar Woods, Orthocell, PEXA, and St Barbara shares are storming higher today

These shares are having a good session on hump day. But why?

Read more »