Owners of Fortescue Metals Group Ltd (ASX: FMG) shares can be a bit happier as the latest dividend hits their bank account.
The ASX mining share has been making big profits over the last few years, which has enabled the ASX iron ore share to pay large dividends as well.
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FY23 final dividend
Fortescue's FY23 final dividend is $1 per share, which was reduced by 17% year over year but it is still solid. That brought the full-year dividend to $1.75 per share, which was cut by 15% year over year.
This $1 per share final dividend is being paid today into bank accounts.
Some shareholders may have opted to take part in the dividend re-investment plan (DRP) to get shares rather than cash. The DRP price for the new Fortescue shares is $19.73, with there being no discount for DRP.
At the current Fortescue share price, this incoming dividend equates to a fully franked dividend yield of 4.9% and 7% grossed-up.
What could owners of Fortescue shares receive in the future?
The company has competing demands on its money these days – shareholders want dividends, but it's also investing heavily in green energy, such as green hydrogen. The business is aiming to keep its balance sheet in good shape.
However, if the iron ore price remains strong then the business can keep generating good profit, while also paying appealing dividends.
The projection on Commsec suggests that the FY24 annual dividend per share could be $1.13. This would be a fully franked dividend yield of 5.5% and a grossed-up dividend yield of 8%.
The annual dividend per share could then fall again to 91 cents per share in FY25, which would translate into a grossed-up dividend yield of 6.4%.
Earnings valuation
At this stage it's forecast to generate earnings per share (EPS) of $2.14 in FY24, but that could change depending on what the iron ore price does.
Using that estimate, the Fortescue share price is valued at under 10 times FY24's estimated earnings.
