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Fortescue vs Commonwealth Bank shares: Which is better for passive income?
If you're hunting for passive income from ASX blue chips, Fortescue Ltd (ASX: FMG) and Commonwealth Bank of Australia (ASX: CBA) are both giants, yet offer quite different flavours of dividend investing. Let's stack them up side-by-side to see which could make the better addition to a passive income-focused portfolio.
The case for Fortescue
Fortescue is one of the world's largest iron ore miners, operating huge integrated sites across Western Australia's Pilbara region. With a vast mining, rail, and port footprint, it's a heavy-duty exporter to Asian steel mills. As of its recent company profile, Fortescue sits among the ASX's top companies, having grown rapidly by tapping into surging global iron ore demand.
The key passive income drawcard? Fortescue's outstandingly high, fully franked dividend yield — a juicy 6.46%. Fortescue has also consistently franked its dividends at 100%. Over recent years, it's paid out generous half-yearly dividends, rewarding shareholders in good times.
However, iron ore mining is a cyclical game. The company's YTD return sits at -19.1%, reflecting both volatility in iron prices and perhaps broader market caution toward commodity exposures.
Notable stats:
- Market cap: $51.48 billion
- P/E ratio: 12.74
- Dividend per share: $1.08 (latest full-year)
- Dividend yield: 6.46% (fully franked)
The case for Commonwealth Bank of Australia
Commonwealth Bank is Australia's largest bank by market cap – a household name, and a top dividend payer for many years. Its sprawling operation covers retail, business and institutional banking, wealth, insurance and more – both here and overseas. As of its most recent public description, it's regarded as a pillar of banking stability in Australia, with a reputation for conservative management and wide reach.
For passive income investors, CBA offers a much lower headline dividend yield than Fortescue – at 3.31%. But every dividend since at least 2003 has been fully franked, and CBA has a long track record of payout reliability and gradual growth, having increased its annual dividend steadily over the years.
CBA's share price is also known for its relative stability compared to most mining stocks.
Key numbers:
- Market cap: $256.02 billion
- P/E ratio: 23.39
- Dividend per share: $5.05 (latest full-year)
- Dividend yield: 3.31% (fully franked)
Valuation comparison
Let's compare the main passive income and valuation metrics side-by-side:
| Fortescue Ltd | Commonwealth Bank of Australia | |
|---|---|---|
| Market Cap | $51.48 billion | $256.02 billion |
| P/E Ratio | 12.74 | 23.39 |
| Dividend Yield | 6.46% (fully franked) | 3.31% (fully franked) |
| Dividend per share | $1.08 | $5.05 |
| Year To Date Return | -19.1% | -1.9% |
Worth noting: Fortescue trades on a much lower P/E than CBA, but mining and banking sectors normally have different valuation ranges. Both companies offer 100% franking.
Recent share price performance
Comparing the past month:
- Fortescue shares dropped from $17.93 on 24 August 2026 to $16.72 on 21 September 2026, a fall of about 6.7% over these four weeks. The YTD return stands at -19.1%.
- Commonwealth Bank shares fell from $156.88 on 24 August 2026 to $152.43 on 18 September 2026, a smaller drop of about 2.8% over this period. The YTD return is -1.9%.
Which is the better buy?
If I'm focusing purely on passive income, my pick would be Fortescue. The main appeal is that much higher, fully franked dividend yield – almost double CBA's, according to the latest data. That's hard to ignore for income investors, provided you're comfortable with the big swings that come with mining stocks.
CBA is the safer, more stable option with an impressive record of steady payouts and lower price volatility. But for someone seeking immediate, generous passive income, Fortescue stands out. I'd stress, though, that Fortescue's payout can be lumpy, as it's closely tied to the iron ore price, so future yields may swing around more than CBA's. If I wanted reliability above all else, I might still lean toward CBA, but on headline yield and franking, Fortescue clinches it for me right now.
