The iron ore miner is well-known for its generous dividend pay outs. How does it compare to its peers?
The post How does the Fortescue (ASX:FMG) dividend compare to its sector? appeared first on The Motley Fool Australia. –
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?
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.
Should you invest $1,000 in Fortescue right now?
Before you consider Fortescue, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Fortescue wasn’t one of them.
The online investing service he’s run for nearly 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 are better buys.
*Returns as of August 16th 2021
Why are Fortescue Metals (ASX:FMG) shares down 14% in a month?
ASX 200 Weekly Wrap: New records just keep coming for the ASX 200
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.