Owning Fortescue Ltd (ASX: FMG) shares typically means receiving a solid level of dividend income each year, so we’re going to look at what it could mean for investors in 2027.
Fortescue is one of the world’s largest iron ore miners and its dividend yield can be high because of the company’s low price/earnings ratio (P/E) ratio and a relatively high dividend payout ratio.
The ASX mining share recently gave an update that sent the Fortescue share price lower, so let’s remind ourselves of what was said.
Difficult start to FY27
In an ASX announcement, Fortescue said that in the three months to September 2026, total iron ore shipments were 46.8 million tonnes (mt), which was 6% lower year-over-year (despite including 2.5mt from Iron Bridge).
The realised/sold price for its hematite (iron ore) was US$80 per dry metric tonne (dmt), lower than US$90.70 it experienced during FY26.
Fortescue noted that iron ore shipments were affected by maintenance during the quarter. Iron ore sales of 42.9mt were below shipments because of the impact of ongoing negotiations with China Mineral Resources Group (CMRG), a key Chinese buyer of iron ore.
So, there’s potential for FY27 to be stronger or weaker, depending on what happens with the iron ore price and negotiations with CMRG.
FY27 payout prediction
Analysts currently project that Fortescue’s earnings per share (EPS) could fall to $1.34 in the 2027 financial year, according to Commsec, which could then see a drop in the dividend per share.
The projection on Commsec currently suggests that owners of Fortescue shares could receive an annual dividend per share of 85.8 cents.
At the time of writing, the forecast payout translates into a dividend yield of 5.6% excluding franking credits and 8% including franking credits.
For most businesses, that’d be a solid yield. However, it does represent a large decline of the dividend per share. It’s only due to the large decline of the Fortescue share price that the yield is still attractive.
What it would take for $1,000 of passive income in 2027
If the analyst predictions do become reality, then we can work out how many Fortescue shares they’d need to own to make $1,000 of passive dividend income from the current financial year.
Excluding franking credits, an investor would need to own 1,166 Fortescue shares to generate $1,000 of passive income.
Including franking credits, an Australian would only need to own 816 Fortescue shares for the desired dividends.
But, with the current uncertainty hanging over Fortescue, I could understand investors wanting to look at other ASX shares for returns.
The post How much must I invest in Fortescue shares to earn a $1,000 passive income in 2027? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison 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.