If I invest $10,000 in Fortescue shares, how much passive income could I earn in FY27?

Fortescue Ltd (ASX: FMG) shares have faced some strong headwinds over the past six months.

The shares are now just shy of a 52-week low, at $16.27 a piece. For the year-to-date they’re down around 27%.

The shares have tumbled around 21% since early April, at the time of writing, driven by a sharp drop off in iron ore prices over the same period.

According to Trading Economics, iron ore spiked to a two-year high of around US$111 per tonne in mid-May, before crashing to around US$94 per tonne in early August. Since then, it has risen slightly, but the metal is still around US$96 per tonne at the time of writing.

Ongoing conflict in the Middle East has also put downward pressure on shares, driven by concerns about rising costs, oil costs and supply, and general market uncertainty.

But it’s not all bad news.

Fortescue shares can offer investors more than just share price growth. The miner can also offer attractive passive income.

What makes Fortescue an attractive passive income player?

The miner generates a substantial cash flow from its large iron ore operations and it is able to return a significant portion of its profits to shareholders through regular dividends.

Fortescue is also actively diversifying its business beyond iron ore and into other markets, such as copper and renewable energy, which could reduce its reliance on iron ore over the long term and strengthen its bottom line.

But exactly what sort of passive income could you get from a $10,000 investment into Fortescue shares?

Let’s take a look.

How many Fortescue shares can I buy with $10,000?

Using the $16.27 share price at the time of writing, $10,000 will buy around 614 shares.

What dividend does the miner pay its shareholders?

The ASX iron ore miner pays its shareholders two fully-franked dividends every year, in March and September. The miner has a policy of returning 50% to 80% of its net profit after tax to shareholders as dividends.

Fortescue paid its most recent dividend to shareholders in late-September. The final 46 cent fully-franked dividend, combined with the 62 cent fully-franked dividend paid out in March, brings the miner’s total FY26 dividend to $1.08 per share. 

That translates to a dividend yield of around 6.6% at the time of writing.

Current forecasts suggest the company’s total dividend per share could fall to 86.4 cents in FY27, driven by lower iron ore prices. 

Based on the current share price, that translates to a forward dividend yield of around 5.3% for FY27.

What passive income can I earn off a $10,000 investment in Fortescue shares?

If the mining giant pays the forecasted 86.4 cent dividend in FY27, then a $10,000 investment (or 614 shares) will generate around $530 in passive income. 

The post If I invest $10,000 in Fortescue shares, how much passive income could I earn in FY27? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.