Fortescue vs BHP: Which ASX miner is better for passive income in October?

Fortescue vs BHP shares: Which ASX miner pays a better passive income?

When it comes to picking ASX mining shares for passive income, Fortescue Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP) are two household names. Both have significant scale, long track records, and consistently franked dividends. But for investors focused on dividend income, the details matter—especially when there are major differences in yield, payout trends, and recent share price movements. Here’s what stands out as I weigh up Fortescue vs BHP shares for passive income right now.

The case for Fortescue

Fortescue is a Perth-based iron ore giant operating across the Pilbara in Western Australia. As the world’s fourth largest iron ore producer, Fortescue has built an integrated network of mines, rail, and port infrastructure. Its operations span the Chichester, Solomon, and Western mining hubs, and run one of the world’s fastest heavy haul railways.

Three fundamentals make Fortescue particularly conspicuous for income seekers:

• Dividend yield: Its current dividend yield sits at 6.67%, well above the average for the ASX 200 and higher than that of BHP, making it appealing for those after regular cash returns.
• Franking: Fortescue dividends are 100% franked, maximising after-tax returns for Australian investors.
• P/E and earnings: With a price-to-earnings (P/E) ratio of 12.06 and earnings per share (EPS) of $0.931, the company looks reasonably valued versus BHP when focusing on income.

On the downside, Fortescue’s share price has dropped -21.5% year-to-date, which some might see as a red flag, but for income hunters this could make for an attractive entry on higher yield.

The case for BHP

BHP is a true blue-chip, diversified mining giant with global operations spanning iron ore, copper, coal and more. Formerly known as BHP Billiton, BHP unified its company structure in 2022 and is consistently one of the largest companies on the ASX. It’s well known for its scale, resilience, and ability to ride out commodity cycles.

For passive income investors, BHP has the following on its side:

• Dividend consistency: The company’s dividend per share this year is $2.42, with strong history of regular semi-annual fully franked payouts.
• Balance sheet and stability: BHP’s vast scale (market cap $319.59 billion) and diversified earnings make its dividends feel more robust across the resource cycle.
• Recent momentum: The share price is up an impressive 41.4% year-to-date, suggesting investor confidence and sector tailwinds.

While BHP’s current dividend yield of 3.91% trails Fortescue, its size, stability, and impressive recent returns may justify the lower yield for investors prioritising long-term security and reliable payments.

Valuation comparison

With dividend income in mind, here’s how Fortescue and BHP stack up on key metrics:

Note: BHP’s P/E ratio of 22.22 and EPS of $1.932 appear mathematically inconsistent under the usual P/E formula. This could mean BHP’s reported P/E is based on underlying or forward earnings, not the same EPS shown.

The biggest point of difference is dividend yield—Fortescue is nearly 70% higher than BHP on this metric. BHP’s much larger market cap and higher nominal dividend per share are balanced against a much higher share price, keeping its yield lower.

Recent share price momentum

Comparing recent share price performance up to 6 October 2026:

• Fortescue closed at $16.41, up 1.4% for the day but down -21.5% year-to-date.
• BHP closed at $62.86, up 1.6% for the day and up a striking 41.4% year-to-date.
• BHP has significantly outperformed Fortescue in share price terms over the past year.

Which is the better buy?

If my main goal was maximising fully franked passive income today, I’d lean toward Fortescue. Its dividend yield is meaningfully higher (6.67% vs 3.91%), and the fully franked payments provide a strong after-tax cash flow. Yes, the share price has had a rough year, but to me that’s a risk many income-focused investors are often willing to accept for a juicier yield—particularly as Fortescue’s payout has been consistent in recent years, as reflected in its dividend history.

BHP certainly offers greater diversification and recent share price momentum, with a nearly $320 billion market cap and a strong track record. If I wanted stability and a lower-yielding but potentially more sustainable dividend over time, I’d consider BHP. But purely on current yield and franking, Fortescue is my pick for passive income in the mining sector right now.

The post Fortescue vs BHP: Which ASX miner is better for passive income in October? appeared first on The Motley Fool Australia.

More reading

• 6 ASX shares downgraded by experts this week
• Is the Fortescue share price a bargain buy?
• Buy, hold, sell: Rural Funds Group, Imdex, Fortescue shares
• 5 things to watch on the ASX 200 on Friday
• Is BHP the best ASX mining share to buy for the next 5 years?

Motley Fool contributor Laura Stewart 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.