The market may be pushing higher today but the same cannot be said for the Fortescue Metals Group Ltd (ASX: FMG) share price. The iron ore giant's shares are down 6% to $19.68 at the time of writing.
This follows the release of its FY 2023 results which revealed a 3% decline in revenue to US$16.87 billion and a 6% fall in underlying EBITDA to US$9.96 billion.
The latter ultimately put pressure on the Fortescue dividend in FY 2023, much to the disappointment of shareholders.
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The Fortescue dividend
For the second half of FY 2023, the Fortescue board declared a fully franked final dividend of A$1.00 per share.
This brought the Fortescue dividend to A$1.75 per share for the full year, which is down 15.5% from A$2.07 per share a year.
The miner's FY 2023 dividend represents a total payout of A$5.4 billion and 65% of underlying net profit after tax. While this is within its 50% to 80% target range, it is down from 75% a year earlier.
Dino Otranto, Fortescue Metals' new chief executive officer following the shock resignation of Fiona Hick this morning, commented:
Reflecting our ongoing commitment to delivering enhanced shareholder returns, the Board has declared a fully franked final dividend of A$1.00 per share, bringing total dividends declared for FY23 to A$1.75 per share. This represents a 65 per cent payout of underlying net profit after tax.
The company's shares will trade ex-dividend for this final payout next week on 4 September. After which, eligible shareholders can look forward to receiving it in their bank accounts later that month on 28 September.
Alternatively, they can take advantage of the company's dividend reinvestment plan.
How does this compare to expectations?
Both the company's earnings and its dividend appear to have fallen short of expectations, which may explain why the Fortescue share price is tumbling today.
Goldman Sachs was expecting revenue of US$16,775 million, EBITDA of US$10,074 million, and a full-year dividend of US$1.26 (A$1.96) per share.
What's next?
Well, if you were hoping for a similarly generous dividend next year, you may need to think again.
While Goldman Sachs has yet to update its estimates to reflect today's results, it currently forecasts a dividend cut to just 62 US cents (96 Australian cents) per share in FY 2024.
