How does the Fortescue (ASX:FMG) dividend compare to its sector?

The iron ore miner is well-known for its generous dividend pay outs. How does it compare to its peers?

| More on:
Mining worker making frame with his hands and peering through it

Image source: Getty Images

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 has enjoyed strong returns over the past few years. When looking back at the company's 5-year chart, its shares have surged by more than 330%.

However, investors are just as focused on the dividends received from Fortescue every 6 months. The blue chip company is well-known within the investing world for paying juicy dividends to its shareholders.

With that in mind, we look at how the Fortescue dividend compares to its peers.

What dividends can shareholders expect from Fortescue this month?

According to Goldman Sachs, its analysts are expecting another big dividend payout when the company reports later this month.

The broker is forecasting the mining giant to pay a total of US$2.70 per share in dividends for FY21. In March 2021, US$1.47 per share was paid to shareholders. This means that the remaining US$1.23 per share will be distributed to shareholders over this earnings season.

Furthermore, Goldman Sachs is predicting that Fortescue will pay dividends per share of US$2.64 in FY22, and US$1.48 in FY23.

Based on the current Fortescue share price of $21.58, this translates to a dividend yield of 16.86%, and 9.45%, respectively. FY21's dividend yield stands at 17.23%.

How does the Fortescue dividend compare to its sector?

The Fortescue dividend compares favourably to its peers, BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

For example, Goldman Sachs is predicting BHP to pay fully-franked dividends per share of US$2.89 in FY21, US$4.46 in FY22, and US$4.00 in FY23.

Based on the current BHP share price of $51.33, this implies a dividend yield of 7.75%, 11.98%, and 10.73%, respectively.

Next up, Rio Tinto is also expected to pay big fully-franked dividends, matching the major miners.

Goldman Sachs has flagged Rio Tinto will pay dividends of US$13.40 in FY21, US$12.50 in FY22, and US$10.90 in FY23.

Again, based on the closing Rio Tinto share price of $116.37, this equates to dividends yields of 15.87%, 14.80%, and 12.90%, respectively.

Do analysts think the Fortescue share price is a buy?

Goldman Sachs slapped a sell rating on Fortescue shares late last month. The broker indicated that the company's share price has pushed ahead of its actual valuation.

In response, Goldman Sachs put a 12-month price target on Fortescue shares at $19.90. This implies a downside of roughly 8% on the miner's most recent share price.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

How big will the BHP dividend be in 2026?

Let’s dig into the potential dividends from this mining giant.

Read more »

an attractive young woman with sad eyes holds a red paper love heart over her mouth as though she has been unlucky in love.
Dividend Investing

What I love about these 2 ASX dividend shares

There’s a lot to like!

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

5 ASX dividend stocks to buy and hold

Analysts think these shares could be top options for income investors.

Read more »

Woman holding $50 notes with a delighted face.
Dividend Investing

I think these 2 high-yield ASX dividend shares are buys in July

These businesses are very attractive for income investors.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Dividend Investing

Buy these ASX dividend shares for passive income

Let's see what analysts are recommending as buys for a passive income portfolio.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Is this the best ASX dividend stock Aussies can buy?

This business has a lot to offer income investors.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Forget BHP and CBA and buy these ASX dividend shares

Analysts rate these shares as top buys for income investors.

Read more »

A young investor working on his ASX shares portfolio on his laptop.
Dividend Investing

1 ASX dividend stock down 46% I'd buy right now

I believe this ASX dividend stock is significantly undervalued.

Read more »