Owning Fortescue Ltd (ASX: FMG) shares has been a really good call for dividend income over the last several years.
The iron ore price is prone to quite sizeable swings, which can have a big impact on the size of Fortescue's net profit and dividend.
In my view, the iron ore price has performed stronger than expected, with it sitting at around US$109 per tonne, according to Trading Economics, allowing the business to generate strong earnings in this financial year.
Let's look at the dividend forecasts for the next few financial years.
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FY26
The ASX mining share saw a solid performance in the first six months of the 2026 financial year. Revenue grew 10% to US$8.4 billion, net profit rose 23% to $1.9 billion and the dividend per share was hiked by 24% to 62 Australian cents.
Fortescue benefited from a 7% rise in the realised price for its hematite, while the production costs (C1 unit costs) fell by 3% – a powerful combination for profit growth.
How big could the FY26 annual dividend be?
The current forecast on Commsec suggests the business could deliver an annual dividend per Fortescue share of $1.03. That translates into a grossed-up dividend yield of 6.7%, including franking credits, at the time of writing.
FY27
However, while the 2026 financial year payout would be a solid dividend, experts are not certain that the dividend will continue to be as good.
In the 2027 financial year, the company is projected to pay an annual dividend per Fortescue share of 79.3 cents, according to the forecast on Commsec. That would represent a year over year reduction of 23% compared to the forecast for FY26.
The prediction for FY27 translates into a forecast grossed-up dividend yield of 5.2%, including franking credits, at the time of writing.
FY28
The 2028 financial year could be an even les rewarding year than FY27, with analysts pessimistic about the long-term direction of the iron ore price with increasing supply, particularly from Africa.
According to the projection on Commsec, the business is forecast to pay an annual dividend per Fortescue share of 66.8 cents. That would be a decline of 16% year over year. At the time of writing, the estimated payout translates into a grossed-up dividend yield of 4.3%, including franking credits.
Overall, this doesn't seem like a great time to invest in Fortescue shares, in my opinion. The Commsec collation of 17 analyst ratings on the business says there's currently eight sells, eight holds and just one buy.
There are better opportunities out there, in my view.
