Fortescue Metals Group Ltd (ASX FMG) today declared a fully-franked dividend of AUD 0.60 per share. The dividend has a record date of May 23, 2019, and will be paid on June 14, 2019.
The FMG share price rallied up by more than 7% today on the back of the dividend distribution update.
About Fortescue Metals Group (ASX FMG)
Fortescue Metals Group Ltd (ASX FMG) is a leading iron ore company in Australia and the fourth largest iron ore producer in the world.
The operations of Fortescue Metals span across the entire country and include mines like Chichester Hub, Solomon Hub, Hedland operations, Eliwana mines, and the Iron Bridge Magnetite project.
Dividend Distribution Update
Today, Fortescue Metals declared a fully franked dividend of AUD 0.60 per share with the record date of May 23, 2019.
The declared dividend along with the interim dividend of AUD 0.19 per share and a special dividend of AUD 0.11 per share took the FY 2019 to-date dividend to AUD 0.90 per share.
Fortescue Metals attributes the high dividend yield to the 47% rally in iron ore prices since January 2019.
The price of iron ore in the quarter ended March 2019 was as high as $71 per dry metric tonne. As a result of the significantly elevated prices, the company’s profit hit record levels.
The market reacted positively to the dividend declaration and the stock price rallied by more than 7%.
The dividend declared today will be paid out on June 14, 2019, and will maintain Fortescue Metals’ dividend payout rate at 50-80% of its net profit after tax.
Dividend Yield of Fortescue Metals
Fortescue Metals has maintained a stable dividend yield of 4.12% for more than two years. The company pays out more than 50% of its earnings as dividends, creating high value for its shareholders.
The company has steady cash flow, and the dividends are well covered by its earnings. It also has the capability to sustain a high dividend payout ratio going forward.
This year, at the current FMG share price, Fortescue is yielding 7.25% gross (including franking credits).
The rally of the FMG share price by more than 7% on the declaration of dividends today clearly indicates that shareholders feel the company is creating sustainable profits.
Fortescue Metals is looking to be a good buy for shareholders looking at generating a steady source of income
The stock is also a winner for long-term buyers looking at growth. Fortescue Metals has continued to demonstrate strong growth potential with high volumes and high margins.
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