The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher today after the ASX miner announced its full-year results and declared a monster final dividend. Here are the key points.
Pumping out records
For the financial year, Fortescue delivered record revenue of US$12.8 billion on the back of a 6% increase in iron ore shipments.
Net profit after tax (NPAT) was US$4.7 billion, another record and ahead of the US$4.6 billion expected, pushing shares higher today.
The company has continued to benefit from its growing scale and has shown a remarkable recovery after near capitulation in 2019, now pumping out US$4.5 billion in free cash flow each year.
The low cost of production at US$12.94 per tonne is allowing a return on equity of 40% and this is likely to continue improving as Chinese ore stockpiles are reportedly well below pre-pandemic levels.
Fortescue’s big dividend
Importantly, the iron ore major’s dividend looks to be a major beat at $1.0 per share compared to the $0.72 expected. This brings full-year dividends to $1.76 per share, up 54% compared to FY19, translating to a 77% payout of NPAT.
The Fortescue share price is up nearly 3% in early afternoon trade to $18.51, which equates to a dividend yield of around 9.5%.
On the whole, I think Fortescue’s FY20 was a great result from a booming sector.
For a detailed write-up on Fortescue’s report, check out this article from Rask Media’s Jaz Harrison: