Fortescue Ltd (ASX: FMG) shares have come under pressure recently.

The iron ore miner is trading around $19.27 at the time of writing, down from its 52-week high of $23.38. The share price has also fallen by around 12% over the past month.

That kind of pullback can make a high-profile share look tempting. Especially given that Fortescue has a long history of generating big cash flows when iron ore prices are strong.

But investors may need to look beyond the first-year numbers before deciding whether this is a bargain.

The valuation looks cheap at first

On near-term forecasts, Fortescue does look reasonably priced.

According to CommSec, consensus estimates point to earnings per share of $1.75 in FY26. Based on the current share price, that puts Fortescue on a price-to-earnings (P/E) ratio of about 11 times FY26 earnings.

That is not demanding on the surface.

The dividend also looks attractive. CommSec estimates dividends per share of $1.20 in FY26, implying a forward dividend yield of around 6.2%.

For income-focused investors, that number may stand out. A 6%-plus yield from a major ASX mining share can look appealing, especially for investors who believe iron ore prices can remain supportive.

But the real question is whether those numbers can last.

The forecasts get tougher

The issue is what happens after FY26.

CommSec consensus estimates suggest Fortescue’s earnings per share could fall to $1.44 in FY27 and $1.04 in FY28. At the current share price, that would lift the P/E ratio to around 13.4 times FY27 earnings and 18.5 times FY28 earnings.

That changes the picture.

The share may look cheap on FY26 earnings, but it looks much less cheap if profits fall as expected over the following two years.

The same applies to the dividend.

CommSec estimates dividends per share of 95.3 cents in FY27 and 67.7 cents in FY28. That implies yields of roughly 4.9% and 3.5%, respectively, based on the current share price.

A 6.2% forecast yield is attractive. A 3.5% yield from a highly cyclical iron ore miner is a different proposition.

That is why I think Fortescue has some value trap characteristics at current levels.

Why I’m cautious

Fortescue remains a very successful company. It has built a world-class iron ore business and has rewarded shareholders well over time.

But I think investors need to be careful when buying miners, mainly because the near-term yield looks high.

Iron ore earnings can move quickly. Prices, demand from China, shipping costs, currency movements, and operating costs can all affect profits. If earnings are already expected to decline, investors need to be comfortable with the possibility that dividends may also become less generous.

Fortescue is also spending heavily on future growth and energy ambitions. That may create opportunities, but it also adds another layer of execution risk.

For me, the cleaner mining exposure remains BHP Group Ltd (ASX: BHP).

BHP has broader commodity exposure, including copper, which I think has stronger long-term demand support from electrification, power grids, data centres, and energy infrastructure. It also has a larger and more diversified asset base.

Fortescue may still perform well if iron ore prices stay higher than the market expects. But if I were choosing between the two, I would prefer BHP shares.

Foolish Takeaway

Fortescue shares may look cheap after their recent fall, especially on FY26 earnings and dividend forecasts.

But the later-year estimates make me cautious. If earnings and dividends decline as expected, the valuation becomes less compelling, and the income appeal fades.

That does not make Fortescue a poor business. It does mean the current setup looks less attractive than the headline numbers suggest.

For investors wanting ASX mining exposure, I would avoid Fortescue shares for now and look more closely at BHP instead.

The post Are Fortescue shares a strong buy or a value trap? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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.

When it comes to superannuation, having a goal in mind for when you want to retire and what sort of income you’re aiming for is a great start.

The sooner you start planning for retirement, the sooner you start to reap the benefits of compound interest and potentially tax-effective ways to save.

Why $1000 a week?

I’ve selected a figure of $1000 per week, or $52,000 per year, because it’s not far off the Association of Super Funds of Australia (ASFA) figure of $55,923 a year, which they say is needed for a single person who owns their own home to have a comfortable retirement.

So what exactly do they mean by comfortable?

This involves being able to afford top-level health insurance, a reasonable car, fast broadband, appropriate devices, regular leisure activities, an annual domestic trip, and an overseas holiday every 7 years.

It’s not an abundant lifestyle, but it definitely fits the “comfortable” bill.

So how much would you need in your superannuation to deliver an income stream to afford such a lifestyle?

It all depends on the dividend yield you are receiving from your stocks.

According to S&P Dow Jones, the S&P/ASX 200 Index (ASX: XJO) delivered an average trailing dividend yield of 4.15% from July 2011 to December 2024.

But this includes plenty of companies that pay low or no dividends. It’s quite possible to aim for a portfolio which delivers a dividend yield of around 5%, while also including some companies which pay a lot more.

In terms of companies that are in the ballpark, three to consider are APA Group (ASX: APA), Amcor Plc (ASX: AMC), and Regal Partners Ltd (ASX: RPL).

For the first two, both companies are operating in markets where they have a dominant position and are unlikely to be disrupted in a hurry by new technology.

Broker Morgans recently issued a research note on Amcor, which said the company will pay a dividend yield of 6.3% this year, then likely rise to 6.6% by FY28.

Regarding gas pipeline operator APA, Jarden has forecast that they will increase their dividend from 58 cents this year to 60 cents by FY28, for a 6.5% dividend yield.

Regal Partners, meanwhile, is expected to pay a dividend yield of 6.2% this year, rising to 7.6% by 2028, according to Bell Potter, which also predicts significant capital returns, with the company’s shares expected to increase to $4.70, up from $2.89.

How much superannuation do you need?

So, back to the calculations of how much super you’d actually need to generate $52,000 a year, the figure sits at $1.04 million if you’re working off a 5% dividend yield, and no drawdown of your nest egg.

So what if you want to boost your super now?

If you’re looking to maximise your superannuation contributions and potentially reduce your tax bill, it’s worth having a look at the amount of concessional contributions you have made and whether you can top that up.

Concessional contributions are contributions made to superannuation from your before-tax salary, and include the super guarantee contributions made by your employer, which are 12% of your salary.

Each financial year, you are allowed to make concessional contributions of up to $30,000. Extra contributions made beyond what your employer contributes can serve to reduce your tax load, as contributions are taxed at 15%. 

In terms of figuring out how much extra you can put into your super in this way, it is possible to keep track of your concessional contributions by using the Australian Taxation Office’s online services.

Your superannuation fund might also be able to show you where you stand with regard to concessional contributions.

If you do put extra into your super and want it to be a concessional contribution, you also need to lodge a notice of intent to claim, which alerts your super fund that it is a concessional contribution, and they will take the 15% tax out as necessary.

This is necessary as it is also possible to make non-concessional contributions of up to $130,000 per year.

The post How much do I need in my superannuation to get $1000 per week in passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 positions in and has recommended Amcor Plc and Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The modern economy is becoming more digital every year.

This creates opportunities for companies that sit inside these changes.

But where are the opportunities for investors?

Here are three ASX tech shares that could be well placed for a more digital world.

NextDC Ltd (ASX: NXT)

NextDC gives investors exposure to the physical backbone of the digital economy.

It develops and operates data centres, which are used by businesses, cloud providers, technology companies, and other organisations that need secure and reliable infrastructure for their data and computing workloads.

That makes NextDC a different kind of technology share. It is not selling apps or software. It is providing the highly specialised facilities that help keep the digital world running.

Demand for data centre capacity is being supported by cloud computing, artificial intelligence, enterprise digitisation, and the rising volume of data being created across the economy.

These facilities are difficult to build well. They require large amounts of capital, technical expertise, power access, cooling capability, security, and strong operating standards. That creates a meaningful barrier to entry.

Morgans recently put a buy rating and $18.00 price target on its shares.

Pro Medicus Ltd (ASX: PME)

Pro Medicus is an ASX tech share that gives investors exposure to the digital side of healthcare.

Its Visage platform helps hospitals and radiology groups manage, view, and interpret medical images. That is important because modern healthcare produces enormous amounts of imaging data. Scans need to move quickly, load reliably, and be available to clinicians when decisions are being made.

Pro Medicus has built a strong reputation in this market, particularly with large healthcare networks overseas. Its software is not just a nice extra for its customers. It can sit close to the daily workflow of radiologists and hospitals.

And with the long-term need for better medical imaging infrastructure only likely to increase as healthcare systems become more digital, Pro Medicus appears well-placed for long-term growth.

Bell Potter recently put a buy rating and $226.00 price target on its shares.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is one of the ASX’s strongest enterprise software businesses.

It provides software used by large organisations such as councils, universities, government bodies, and corporations.

These customers need systems that can help manage finance, payroll, planning, assets, projects, and administration. The work happens behind the scenes, but it is essential to how these organisations function.

This gives TechnologyOne an attractive position. Its software can become deeply embedded in customer operations, which can make relationships sticky and support recurring revenue over time.

And with the company’s international expansion gaining momentum, it appears well-placed for growth over the long-term.

Morgan Stanley has an overweight rating and $32.00 price target on its shares.

The post 3 buy-rated ASX tech shares with bright futures appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Nextdc, Pro Medicus, and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.