Is the Fortescue share price a buy for its 8% dividend yield?

Fortescue could be a contender for significant dividend income from a blue-chip.

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At the current Fortescue Ltd (ASX: FMG) share price, investors may find an ASX mining share with an incredibly attractive dividend yield.

The iron ore miner has been one of the biggest dividend payers on the ASX over the last 10 years.

Fortescue's dividend in FY26 could be another year of a large payout for shareholders. Let's look at how large the payment could be for the 2026 financial year.

Person with a handful of Australian dollar notes, symbolising dividends.

Image source: Getty Images

Dividend projection for the ASX mining share

Despite all of the global economic disruption during FY26, the iron ore price has held up fairly well above US$100 per tonne through most of the 2026 financial year.

According to Trading Economics, the iron ore price was trading above US$110 per tonne a few weeks ago. While it has dropped quite a bit since that peak in mid-May, it's still above US$100 per tonne, which is still high enough for Fortescue to generate very pleasing net profit.

Looking at the projection on Commsec, the business is forecast to pay an annual dividend per share of $1.20 in FY26, though investors have already received the FY26 interim dividend. At the time of writing, the annual payout translates into a dividend yield of 5.8% excluding franking credits and 8.25% including franking credits.

That's a high dividend yield compared to the overall dividend yield of the ASX share market. But, is it good enough to buy the ASX mining share just for the passive income?

The passive income may reduce

While the dividend for FY2026 may be exceptionally attractive, it's important to consider what may happen with future dividends and if the Fortescue share price is attractive.

The dividend and profit this year may be strong, but future years may not be as good. One of the factors is that iron ore production from Africa could increase in the coming years – increased supply is likely to be a headwind for the iron ore price and therefore Fortescue's financials.

The current projection on Commsec suggests the business could pay an annual dividend per Fortescue share of 95 cents in FY27 (down 21%) and 67.5 cents per share in FY28 (down another 29%). Therefore, the Fortescue dividend yield is estimated to reduce in the next two financial years.

I wouldn't particularly want to invest in a business for passive income if the dividends are expected to fall substantially relatively soon.

Is the Fortescue share price a buy?

In terms of the attractiveness of the Fortescue share price, analysts are not feeling positive about the ASX mining share.

According to Commsec's collation of analyst opinions on the company, there are currently eight sell ratings, eight hold ratings and one buy rating regarding Fortescue shares.

It seems there are better opportunities out there than Fortescue shares.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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