Owning Fortescue Ltd (ASX: FMG) shares has been very rewarding over the last few years, with piles of passive income sent to shareholders. It has been a leading ASX dividend stock over the last five years. However, the foreseeable future may not be as positive as the past.
Fortescue's profit each year is heavily influenced by the iron ore price. The iron ore price is drifting towards US$100 per tonne, which is reducing Fortescue's monthly profit and likely reducing the next potential dividend, too.
Broker UBS is forecasting the iron ore price could fall to US$95 per tonne in 2026 and then decline further to US$90 per tonne in 2027. UBS is also projecting the Fortescue dividend could decrease to 87 cents per share in FY26 and 74 cents per share in FY27.
If some investors are focused on passive income but are overinvested in Fortescue shares, it could be helpful to consider other ASX dividend stocks with more stability, like the two below, which have both been growing their payouts for at least 20 years in a row.
Alternative ASX dividend stocks
APA Group (ASX: APA)
APA is one of the largest infrastructure businesses in Australia. It owns a huge network of gas pipelines across the country, transporting half of the country's gas usage. The business also owns gas processing facilities, gas storage, gas energy generation, wind farms, solar farms, and electricity transmission. It's an impressive play on Australian energy.
One of the main reasons I like this ASX dividend stock is that it's steadily investing in new energy assets to expand its portfolio and grow its cash flow. One tailwind for its income is that a significant majority of APA's revenue is linked to inflation, so the recent inflationary period has provided a boost.
APA has grown its annual distribution every year since 2004. It's expecting to grow its distribution by 1.8% to 57 cents per security. That translates into a distribution yield of 8.1%, which I think is a very solid yield and a good starting point.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
I'd call this business, which many investors nickname Soul Patts, the king of dividend growth. It has grown its annual ordinary dividend every year since 2000. This is very impressive in my view because, during that time, there were two global economic shocks (the GFC and COVID), as well as the recent inflationary period.
It has achieved this impressive feat by owning a diversified portfolio of investments across a range of sectors capable of providing defensive cash flow to Soul Patts. Some of those sectors include telecommunications, resources, building products, commercial property, agriculture, and swimming schools.
The ASX dividend stock receives dividends and other income from its portfolio and then pays a majority of that cash flow (after paying for its expenses) to shareholders as a dividend. With the retained cash flow, the ASX dividend stock invests in more opportunities to grow its portfolio.
This is an impressive business, which is why it's already one of my largest holdings, and I'm planning to buy more.
