How does the BHP dividend stack up against the latest Fortescue payment?

Fortescue Metals Group Limited (ASX: FMG) shares are suffering after the company’s latest dividend was slashed by 43% this morning, leaving many wondering how it stacks up against BHP Group Ltd (ASX: BHP)’s most recent payout.

The smaller of the two S&P/ASX 200 Index (ASX: XJO) iron ore giants has offered investors a $1.21 final dividend per share they hold. Meanwhile, BHP will pay a US$1.75 per share final dividend next month.

Obviously, the latter is offering a larger payout per share, but is it really superior to that of Fortescue? Keep reading as we compare the pair.

Is the BHP dividend better than that of Fortescue?

Fortescue revealed its $1.21 final dividend for financial year 2022 on Monday and, while the company’s share price is being weighed down by its results, its payout might actually compete with that of BHP.

Fortescue’s latest dividend brings its full-year offerings to $2.07. Considering the Fortescue share price at the time of writing – $18.98 – it’s trading with a dividend yield of 10.9%.

The offering also represents a payout ratio of 75% of net profit after tax (NPAT) and comes fully franked. That means it could bring additional benefits for some investors at tax time.

Meanwhile, the true value of BHP’s latest dividend in Australian Dollars will be revealed next week. However, US$1.75 represents $2.55 Aussie bucks at today’s exchange ratio – which would bring BHP’s full-year dividends to $4.63.

Considering that figure and the BHP share price right now – $42.08 – the materials giant could arguably boast a dividend yield of 11% – a fraction higher than that of Fortescue.

On top of that, its final dividend represents a 77% payout ratio and also comes fully franked.

Both companies offer a dividend reinvestment plan (DRP), allowing investors to receive dividends in the form of new shares.

All in all, both companies are offering a decent dividend at a strong yield. But that of BHP represents slightly better value right now.

Investors wanting to get on board for BHP’s upcoming final dividend better do so quickly. The stock will trade ex-dividend on Thursday, meaning Wednesday will be the last chance for new investors to secure the payout.

The post How does the BHP dividend stack up against the latest Fortescue payment? appeared first on The Motley Fool Australia.

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More reading

• Everything you need to know about the trimmed-down Fortescue dividend
• Fortescue share price backtracks as final dividend is slashed by 43%
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 dividend shares to buy now according to analysts
• Earnings preview: Here are 3 ASX 200 shares reporting next week

Motley Fool contributor Brooke Cooper 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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