Owning Fortescue Ltd (ASX: FMG) shares has been extremely fruitful for dividend income over the last several years, thanks to the high level of profits it achieved and the low price/earnings (P/E) ratio it typically trades at.
The ASX mining share is heavily dependent on the iron ore price, which is currently above US$100 per tonne, enabling a solid level of profit generation for the business.
Indeed, the commodity price is pleasing enough for broker UBS to estimate that Fortescue could achieve a net profit of US$4 billion in FY26, representing a solid increase from FY25.
While the new Simandou project in Africa could be a headwind for the iron ore price over the next few years, I don't think it will have a noticeable negative impact in 2026. Let's take a look at how much passive income owners of Fortescue shares could receive in 2026 with a $10,000 investment.
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Passive income projection
If broker UBS is correct with its forecast profit figure, that could mean the business is also able to grow its dividend per share for investors in FY26, which would be great. Resource businesses usually base their passive income payments on a dividend payout ratio derived from net profit.
UBS currently projects that owners of Fortescue shares could receive an annual dividend per share of $1.29 in the 2026 financial year. That means the business could deliver a grossed-up dividend yield of 8.8%, including franking credits, at the time of writing.
There are few ASX blue-chip shares that offer a dividend yield anywhere near what Fortescue could pay in the current financial year.
Of course, the iron ore price will play a significant role in determining how much cash Fortescue has to distribute to shareholders in the coming months.
With that level of payout, owning $10,000 of Fortescue shares could lead to around $880 of passive income (including the franking credits).
Is the Fortescue share price a buy?
Commenting on its views on the iron ore market, UBS said:
Fundamentals have been tighter than expected on a range of factors… However, we continue to expect the fundamentals to ease as Simandou ramps up over the next 3yrs, with first tonnes Nov-25. We expect low grade discounts to stay narrow, bolstering FMG's realisations as low grade tonnes will be needed to blend down high grade material from Simandou. 2) Macro: China's economic outlook will also be pivotal and we continue to monitor key indicators. US trade policy will also be key.
UBS currently has a neutral rating on the ASX mining share, with a price target of $20. That suggests a possible slight decline over the next year, but it also indicates that the Fortescue share price can maintain the gains it has achieved this year (it's up more than 10% in 2025 to date).
