Over the past few years, Fortescue Metals Group Limited (ASX: FMG) shares have built up a reputation as one of the heavy hitters on the ASX when it comes to dividends. Fuelled by record iron ore prices, Fortescue was able to raise its annual dividend from $1.14 per share in 2019 to a record $3.58 per share in 2021.

If Fortescue kept up that level of dividend generosity, this ASX 200 miner would have a trailing dividend yield of 17.76% right now.

Alas, 2022 and 2023 so far have not been quite as kind to Fortescue investors as 2021 was.

So today, let’s check out how the Fortescue dividend compares to the company’s mining rivals in BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

As we’ve previously flagged, the Fortescue dividend has come back to earth since the highs of 2021. In 2022, the company paid out a total of $2.07 in dividends per share. And in 2023 so far, Fortescue’s March interim dividend came to 75 cents per share, down from last year’s interim dividend of 86 cents.

That 75 cents per share dividend, combined with last year’s final dividend of $1.21 per share, gives the Fortescue share price a trailing dividend yield of 9.72% on current pricing. That comes fully franked too, as is typical with Fortescue’s payouts.

How does the Fortescue dividend stack up against BHP and Rio?

Let’s compare all of that to ‘the Big Australian’, BHP. BHP’s dividend trajectory over the past few years has been similar to that of Fortescue. In 2019, BHP shares paid out $3.33 worth of dividends per share. This rose to $4.03 per share in 2021 and then to a record $4.63 in 2022.

However, BHP’s interim dividend for 2023 was a major downstep from the previous year, with the miner only forking out $1.36 per share, as opposed to the $2.08 investors bagged in March 2022.

Today, BHP shares have a trailing dividend yield of 8.95%, fully franked.

Like Fortescue, Rio Tinto’s dividends also peaked in 2021. We saw a similar path trodden by this ASX 200 miner, with dividends ramping up from $8.97 per share in 2019 to a record $12.77 per share by 2021 (that includes Rio’s special dividends).

But 2022 saw this decline somewhat, with the miner doling out a total of $10.47 in payouts last year. 2023’s final dividend also saw a drop, falling from $5.77 ($6.63 including the special dividend) in 2022 to the $3.26 we saw last month.

Today, Rio shares offer a trailing and fully-franked yield of 6.55%.

Foolish takeaway

So Fortescue is clearly the winner today when it comes to raw dividend yield. However, remember that a company’s dividend yield always reflects what it has paid out in the past, not what it will pay out in the future. It’s entirely possible that 2023’s remaining dividends push BHP over the top of Fortescue in terms of dividend yield.

Fortescue is also far more reliant on iron ore for its earnings, whereas BHP (and Rio to a lesser extent) have a more diversified earnings base of other metals.

But there’s no doubt that Fortescue, as well as BHP and Rio, have been absolute cash machines for ASX dividend chasers in recent years. It will be interesting to see what the rest of 2023 and 2024 hold in store for income investors.

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

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More reading

• Why the BHP dividend forecast has caught my attention!
• How big will the Rio Tinto dividend be next year?
• This fund manager thinks the BHP share price could reach $100!
• Is the Fortescue share price a buy for its 2024 dividend yield?
• Could the iron ore price slide below $100 US dollars in 2023?

Motley Fool contributor Sebastian Bowen 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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