Passive income from Fortescue Ltd (ASX: FMG) has been genuinely good over the past few years. The Company has paid out some of the most impressive dividends on the ASX, backed by strong iron ore prices and lean operations.
Figure 1: Fortescue corporate logo [Courtesy: Fortescue]
But the next chapter looks different. Analysts are projecting a step-down in what ASX investors could earn from FMG shares across FY26, FY27, and FY28. The reasons behind that trend matter as much as the numbers themselves.
Q3 FY26 ASX Announcement: Record Nine-Month Shipments
Fortescue’s Q3 FY26 ASX Announcement, published 24 Apr 2026 stated that during this quarter, total iron ore shipments of 48.4Mt, Fortescue’s best third quarter performance ever. That lifted nine-month total exports to 148.7Mt – up four per cent on the same period of FY25 and the highest ever levels
The Hematite C1 unit cost fell four per cent quarter on quarter to US$18.29/wmt, driven by the mine plan, lower scheduled maintenance, and tight cost management. Full-year total shipment guidance of 195 to 205Mt remains unchanged.
Total shipments from Iron Bridge Concentrate of 2.0Mt for the quarter were impacted by Tropical Cyclones Mitchell and Narelle. Iron Bridge continued full-year shipments guidance cut to 9 to 10Mt at 100 per cent basis, down from 10-12Mt
Q3 FY26 Hematite Operations
Q3 FY26 Iron Bridge Operations
Iron Bridge Concentrate realised a price of US$121.76/dmt in Q3 FY26. That was 101 per cent of the average Platts 65% CFR Index and 117 per cent of the average Platts 61% CFR Index.
H1 FY26 Financial Results
Revenue for the period ended 31 Dec 2025 increased to US$8.4 billion. Net profit after tax rose 23 per cent to US$1.9 billion. Fortescue hiked its interim dividend by 24 per cent to A$0.62 a share at a 65 per cent payout ratio of underlying NPAT.
Figure 2: Fortescue’s H1 FY26 revenue, EBITDA and net profit performance compared with previous reporting periods [Courtesy: Fortescue]
H1 FY26 Key Financials
FMG Shares Passive Income Australia 2027: What the Dividend Forecasts Say
Fortescue has a stated policy of paying out 50 to 80 per cent of full-year underlying NPAT as dividends. The question for ASX investors looking at FMG shares’ passive income is what happens to NPAT from here.
Figure 3: Fortescue dividend history and payout ratio under its 50-80% underlying NPAT distribution policy [Courtesy: Fortescue]
Analysts are not aligned on a single number, and that disagreement is itself informative. The CommSec consensus forecast for FY26 dividends sits at A$1.03 per share. The forecast for FY27 is 79 cents per share, and for FY28 is 67 cents per share.
UBS runs a different set of projections. UBS forecasts Fortescue could pay an annual dividend per share of 67 cents in FY27, with the broker modelling that the dividend payout ratio could fall to 50 per cent in the medium term as capital expenditure steps up against a muted iron ore price outlook. In the 2028 financial year, UBS is forecasting that Fortescue could pay an annual dividend per share of 77 cents.
The range across brokers is wide. That spread reflects genuine uncertainty about the iron ore price in the outer years rather than a data error. FY26 is the high-water mark of this dividend cycle. From FY27 onwards, forecasts point downward across both sources.
Fortescue Dividend Forecast: CommSec vs UBS
The franking credits remain meaningful here. A fully franked A$1.00 dividend is effectively worth approximately A$1.43 in pre-tax income for an eligible Australian investor, partially offsetting the step-down in headline dividend per share.
FY26 Guidance
Industry Outlook: Iron Ore Faces a Supply Reset
The Simandou mine in Guinea is expected to ship about 20 million tonnes of iron ore in 2026, ramping up to full capacity of 120 million tonnes per year by 2030. Once scaled up, it could influence global market power networks away from major miners, diminishing China’s use of those majors and enhancing its negotiating position in the iron ore space.
With average ore grades of approximately 65 per cent iron content and exceeding Fortescue’s Hematite realisation grade. This premium quality competition is a direct pain point on the iron ore price assumptions that are embedded in analyst dividend forecasts.
UBS predicts the iron ore price could sit around US$96 per tonne in the 2026 calendar year and then fall to US$90 per tonne in 2027, driven in large part by this new supply.
For ASX mining investors holding FMG for passive income, a sustained move lower in the iron ore price is the single biggest risk to the dividend trajectory through FY27 and FY28.
The CommSec and UBS forecast divergence across those years reflects exactly that uncertainty. What ASX investors could earn from Fortescue is not just a function of how well the Company operates. It is a function of where iron ore trades.
Future Direction and Impact on Dividend Capacity
Fortescue is investing heavily in its Green Metal Project at Christmas Creek, targeting first hot metal in the June Quarter 2026, alongside its recently completed acquisition of the Cañariaco Copper Project in Northern Peru.
These are the right long-term moves for the business. In the near term, however, rising capital expenditure across green energy and copper directly reduces free cash flow available for distributions.
That is why UBS is modelling a payout ratio closer to 50 per cent across FY27 and FY28, and why the dividend step-down is expected to persist even if operations remain strong.
FAQ
Q1. What is Fortescue Ltd?
Ans. Fortescue Ltd (ASX: FMG) is one of the world’s largest iron ore producers, operating across the Pilbara region of Western Australia.
Q2. What could ASX investors earn from FMG shares in FY27 and FY28?
Ans. CommSec forecasts A$0.79 per share in FY27 and A$0.67 per share in FY28, both lower than FY26.
Q3. What is the Fortescue dividend per share forecast UBS?
Ans. UBS forecasts A$0.99 for FY26, A$0.67 for FY27, and A$0.77 for FY28.
Q4. Are Fortescue dividends fully franked?
Ans. Yes, Fortescue pays fully franked dividends, making them worth approximately A$1.43 in pre-tax income for every A$1.00 received by eligible Australian investors
Disclaimer
This article is meant only for informational purposes. If you are an investor watching Fortescue closely, all the data published in this content is sourced from ASX announcements and external sources. Kindly verify all information related to share price and market data before acting on it. Any investment should be made at the investor’s own risk. Colitco does not hold any position in the above-mentioned Company.
Sources
- https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-03060661-6A1313564&v=undefined
- https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-03082072-6A1321851&v=undefined
- https://www.fool.com.au/2026/05/30/heres-the-dividend-forecast-out-to-2028-for-fortescue-shares/
- https://www.fool.com.au/2026/03/03/heres-the-dividend-forecast-out-to-2030-for-fortescue-shares-2/
- https://www.fool.com.au/2026/05/03/if-i-invest-10000-in-fortescue-shares-how-much-passive-income-will-i-receive-in-2027/
- https://www.fool.com.au/2025/12/03/invested-in-fortescue-shares-here-are-the-dividend-dates-for-2026/
- https://ieefa.org/resources/australias-iron-ore-sector-crossroads-business-usual-or-time-embrace-green-iron
