Owning Fortescue Ltd (ASX: FMG) shares has typically been a good decision for the level of passive income paid each year.
The recent FY26 half-year result was stronger than what investors may have expected several months ago, and the dividend was particularly pleasing for shareholders.
Fortescue announced that its net profit increased by 23% to US$1.9 billion for the first six months of FY26 and the interim dividend per share increased 24% to 62 cents.
Let's see what experts think of the potential dividends.
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FY26
The company's financials are benefiting from a combination of a higher realised price for the iron ore it's selling, as well as lower production costs per tonne.
Broker UBS said that the HY26 dividend of 62 cents per share was stronger than the market's expectations with a dividend payout ratio of 65%, which UBS said was "sector-leading".
Underlying operating profit (EBITDA) was around 5% stronger than expected, though earnings was a "slight miss" compared to market expectations reflecting higher depreciation and amortisation (D&A) on Fortescue's growing asset base.
Broker UBS predicts that Fortescue could pay an annual dividend per share of $1.22. At the time of writing, that translates into a grossed-up dividend yield of 8.2%, including franking credits.
That's a large payout, but it's not expected to be as high in subsequent years because of a combination of a lower dividend payout ratio and a smaller net profit.
FY27
Profit could struggle in the 2027 financial year. UBS predicts that the iron ore price could be around US$96 per tonne in the 2026 calendar year and then US$90 per tonne in 2027. The reduction is predicted because the new huge African iron ore project called Simandou (not owned by Fortescue) is going to ramp-up and add to global supply.
Negotiations by key Chinese iron ore buyer CMRG with iron ore miners are proving to be a challenge for the sector, and could hurt the iron ore price. But, Fortescue seems to have "encountered less scrutiny than peers".
UBS predicts that owners of Fortescue shares could receive an annual dividend per share of 67 cents in FY27. The broker is modelling that the dividend payout ratio could fall to 50% in the medium-term as capital expenditure steps up against a muted iron ore price outlook.
While the dividend is expected to be lower, UBS predicts that the company's net debt can steadily improve to a net cash position and continue strengthening in the following years.
FY28
The FY27 dividend is projected to be the lowest payout of the rest of this decade but then increase in dollar terms.
In the 2028 financial year, UBS is forecasting that Fortescue could pay an annual dividend per share of 77 cents.
FY29
The 2029 financial year could see an even larger dividend per share, with predictions that the profit could rise.
UBS suggests that the Fortescue dividend per share could rise to 81 cents per share in FY29.
FY30
The 2030 financial year could be the strongest dividend since FY26, according to the projections. Fortescue is forecast to deliver an annual dividend per share of 87 cents.
Interestingly, UBS highlighted that Fortescue could (further) expand in copper in the coming years:
Optionality: Alta Copper acquisition close and acceleration of studies toward FID at its Cañariaco project in Peru (2024 PEA: 158ktpa Cu annual average first 10yrs, 27yr LOM). Copper tenements in Kazakhstan and Canada are advancing toward drilling this year. Exploration strategy is to acquire tenements in world class terrain and aggressively drill out.
Overall, FY26 could be the best dividend we see for a while, but the dividends could get progressively better.
