The iron ore price is trading around a two-year low of US$90.95 per tonne on Tuesday, according to Trading Economics.

Iron ore has fallen 6.7% over the past month and 15.1% in the calendar year to date (YTD).

The iron ore price impacts the earnings and, thus, valuations of the major ASX 200 iron ore shares, but not as much as it used to.

That’s because three of the four majors have significantly diversified themselves, primarily into copper and/or lithium in recent years.

What’s happening with ASX 200 mining shares today?

The BHP Group Ltd (ASX: BHP) share price is $59.37, down 2.3% over the month and up 30% YTD.

The Rio Tinto Ltd (ASX: RIO) share price is $153.79, down 7.4% over the month and up 4% YTD.

Iron ore pure-play Fortescue Ltd (ASX: FMG) is $15.27 per share, down 8.6% over the month and down 31% YTD.

The Mineral Resources Ltd (ASX: MIN) share price is $44.64, down 16.3% over the month and down 19% YTD.

Experts say today’s new mining boom is substantially different to the 2000s because it’s led by critical minerals, not iron ore.

The iron ore price rose just 7% in FY26 while other metals and minerals relevant to the energy transition skyrocketed.

The outlook for the iron ore price over the next five years is rather bleak.

Iron ore price to tumble 20% over 5 years

The Federal Department of Industry, Science, and Resources has just published its 5-year outlook for commodities.

The department expects the iron ore price to average US$83 per tonne in FY27, down from US$92 per tonne in FY26.

Looking ahead, it expects the iron ore price to drop to an average US$72 per tonne in FY31.

That’s 21% lower than today.

The department says the primary force driving down the iron ore price will be changed supply and demand dynamics.

According to the department’s report:

Iron ore prices are forecast to fall as global supply rises and demand weakens.

This is expected to reduce Australia’s export earnings from $107 billion in 2026–27 to $96 billion in 2027– 28 and $79 billion by 2030–31 …

In 1H FY26, steel production weakened in China, which imports 75% of the world’s iron ore, as well as Russia, and the Middle East.

Steel production directly affects the iron ore price because iron ore is the main raw material used to make steel.

Meanwhile, the global supply of iron ore increased, particularly from Australia, Brazil, Guinea’s Simandou project, and South America.

Simandou is the world’s largest undeveloped high-grade iron ore deposit.

It is majority-owned by Chinese investors, but Rio Tinto also has a stake.

The department said:

Simandou mines in Guinea — Africa’s largest high-grade iron ore deposit — are beginning to add a more visible source of supply-side pressure to the global seaborne iron ore market.

Shipments from Simandou began to ramp up from the September quarter, with volumes expected to rise noticeably as mine, rail and port operations scale toward full capacity.

While the ramp-up is likely to be uneven, the arrival of high-grade Simandou ore adds to already ample global supply and, over time, could increase competitive pressure on higher-cost and lower-grade producers.

Between FY27 and FY31, the department forecasts gradually rising global supply and lower Chinese demand due to weaker steel output.

Australian iron ore export volumes are expected to peak over the next two years as new supply comes online.

Exports will then ease as China’s demand weakens and new supply from Africa and Brazil increases competition…

The department expects Australian iron ore export earnings to fall from $123 billion in FY26 to $79 billion in FY31.

That’s a 35% drop in five years.

This will be driven by a lower iron ore price, lower volumes, falling ore grades, and a stronger AUD/USD exchange rate.

Check out the official price forecasts for 9 other commodities, including copper and lithium, here.

The post Iron ore price set to tumble to US$72 per tonne. Here's why appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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.

AMP Ltd (ASX: AMP) shares are down around 1% to $2.44 a piece at the time of writing.

The shares have now slid around 8% from a multi-year high of $2.66 late last month, but they’re still up 33% for the year-to-date and 36% higher than 12 months ago.

AMP shares rallied higher pretty consistently between March and September thanks to a rebound in investor sentiment. The company has managed to execute an operational turnaround this year, which means it has been able to improve its earnings and return some capital to shareholders.

The company has posted strong financial results, too. Over the course of the year, its assets under management (AUM) have climbed, its wealth business has improved, it has boosted its interim dividend, and it has also completed a series of share buybacks.

Last week, AMP provided investors with its third-quarter FY26 cash flow and business update. It confirmed that platforms net cash flows has increased 20% compared to the same quarter last year, superannuation and investment net cash outflows has improved year-on-year, and total AUM has now reached $168 billion across its Australian and New Zealand wealth business. 

The update follows the company’s first half FY26 results announcement in August. At the time, AMP announced a 33% increase in underlying NPAT for the first half of FY26, and an 8.2% year-on-year increase in AUM to $167.6 billion. Management credited its AUM growth to momentum in AMP’s wealth and retirement businesses.

Why are AMP shares sliding lower?

There isn’t any price sensitive news out of the company recently which would explain the latest selloff. 

It’s most likely a result of profit-taking investors selling up their shares after the late-September spike. 

AMP also traded ex-dividend in late-August. It’s common for a share price to decline following a dividend payment because new investors aren’t eligible for the payout.

Some broad economic headwinds, including September’s interest rate hike and higher inflation figures has also weighed down the ASX financial sector as a whole over the past month.

Can the shares surpass the multi-year high we saw last month?

It’s possible.

TradingView data shows that the majority (six out of nine) of analysts have a buy/strong buy rating on AMP shares.

The average $2.65 target price implies an upside of around 9%, at the time of writing. That’s just one cent shy from the $2.66 high that AMP shares reached in late-September.

But some are even more bullish that the financial services company’s shares could storm even higher.

The maximum $2.92 target price implies a 20% increase over the next 12 months, at the time of writing. The ASX stock last traded at around the $3 level back in October-2018.

The post What do brokers tip for AMP shares over the next 12 months? 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.

Rural Funds Group (ASX: RFF) shares are steady at $1.92 apiece on Tuesday.

Rural Funds is an ASX agricultural real estate investment trust (REIT) that leases land and infrastructure to farmers.

The REIT’s portfolio is focused on almond orchards, vineyards, cattle, cotton, and macadamias. Its tenants include Treasury Wine Estates Ltd (ASX: TWE), Australian Agricultural Company Ltd (ASX: AAC), and Select Harvests Ltd (ASX: SHV).

RFF is externally managed by Rural Funds Management (RFM), which has been managing agricultural investments since 1997.

RFM’s strategy for Rural Funds is to generate capital growth and income from developing and leasing agricultural assets.

Let’s talk dividends

Over the past 12 months, Rural Funds has paid investors 11.7 cents per share combined over four quarterly payments.

That gives this ASX REIT an unfranked trailing dividend yield of 6.1%.

That looks pretty good compared to the average yield from the S&P/ASX 200 Index (ASX: XJO) in FY26, which was 4.2% (with franking).

Top broker Bell Potter expects Rural Funds shares to continue paying an 11.7-cent dividend in FY27, FY28, and FY29.

That sort of stability is appealing for investors who value reliable passive income.

The broker also expects Rural Funds shares to grow given its 12-month price target of $2.55.

That implies 32.5% potential upside ahead.

Put the 6.1% dividend yield on top, and we’re talking expected total returns of 38.6% over 12 months.

That looks even better next to the ASX 200’s total return for FY26, which was 7%.

How much income will you get on a $15,000 investment?

Well, $15,000 will buy 7,812 Rural Funds shares today.

If we multiply 7,812 shares by 11.7 cents, we get income of $914.

Experts say income stocks are likely to become more appealing than growth stocks due to changes to capital gains tax (CGT).

From 1 July next year, the current 50% CGT discount for assets held longer than 12 months will be replaced with cost base indexation.

Existing ASX shares investments are grandfathered, which means the 50% discount will still apply to gains made before 1 July.

After that, capital gains on existing and new ASX shares investments will be subject to cost base indexation.

A minimum 30% CGT tax rate will apply.

This leads to an important question.

Would you rather be invested in companies paying out most of their profits as dividends, on which you will pay your marginal rate of tax?

Or would you prefer companies that reinvest their profits in order to grow their share prices, then pay 30% CGT when you sell?

The answer to this question depends on what stage of life you’re in, and what your priorities are.

In FY27, the marginal tax rate on income up to $18,200 is zero.

The tax rate on income between $18,201 and $45,000 is 15%.

These tax brackets are especially relevant to retirees who are no longer receiving wages but are getting some investment income.

Investors switch to ASX income stocks ahead of CGT changes

Portfolio strategist Damien Boey from Wilson Asset Management says many clients are switching to dividend shares ahead of 1 July.

Boey said:

So a lot of people … have decided that look, it’s not worth their while anymore to keep holding out for big capital gains.

They’d rather actually go for much more income-based investment … there’s definitely a shift there for investors to prefer income over capital growth.

Boey says investors who still want to target growth are looking overseas to markets like the US.

Presumably, the logic is to take advantage of Australia’s superior dividend yields and franking credits, and seek outsized growth elsewhere.

In FY26, US shares grew at a faster rate than ASX 200 shares by a factor of 7x.

Perhaps a 30% CGT tax rate feels more palatable to investors when they’re achieving extraordinary gains.

Boey reckons the ASX is unlikely to deliver outsized capital growth any time soon given weak long-term productivity.

He said:

…when you’re really starving the place of actual, real productivity growth, then what are you actually earning?

Where is the capital growth going to come from?

Rural Funds share price snapshot

Rural Funds shares are down 1% over 12 months and down 32% over five years.

The post If I invest $15,000 in Rural Funds shares, how much passive income will I get? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Rural Funds Group and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.