Image Source: Pixabay

Fortescue (FSUMF) is an Australia-based iron ore miner. It has grown from obscurity since 2008 to become the world's fourth-largest producer. Growth was fueled by debt, now repaid.

Expanding from 55 million metric tons in fiscal 2012 to about 185 million metric tons in 2022, Fortescue now supplies nearly 10% of global seaborne iron ore. Further expansion above 200 million metric tons is likely once it completes construction of its 22 million metric tons Iron Bridge magnetite mine.

However, with longer-term demand likely to decline as China's economy matures, we expect Fortescue's future margins to be below historical averages. More recently, Fortescue diversified into green energy, with ambitions to become a major supplier of green hydrogen and green ammonia. Its efforts are early stage.

The company was formerly known as Fortescue Metals Group Limited and changed its name to Fortescue Ltd in November 2023.

Fortescue Ltd was incorporated in 1983 and is headquartered in East Perth, Australia.

Three key data points gauge

Fortescue Ltd or any dividend-paying firm.

The key three are:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money.

FSUMF Price

Over the past year, Fortescue’s share price rose 19.3% from $13.47 to $16.80 as of Monday’s market close.

If FSUMF shares trade in the range of $12.00 to $20.00 this next year, its recent $16.80 share price might rise to $19.00 by next year. Of course, Fortescue’s price could drop about the same $2.20 estimated amount or more.

My annual upside estimate of $2.20 however, is calculated at about  $0.25 below FSUMF’s average annual price gain over the past five years.

FSUMF Dividend

Fortescue Ltd has paid variable semi-annual dividends since March 2011. FSUMF’s most recent SA dividend of $0.71 was declared on February 22 to shareholders of record on February 28th and payout is being made on March 27th, Wednesday.

A forward-looking $1.36 annual dividend yields 8.1% at Monday’s $16.80 share price.

FSUMF Returns

To put it all together, add Fortescue Ltd estimated annual dividend of $1.36 to the estimated price upside of $2.20 to find a $3.56 gross gain.

At Friday’s $16.80 share price, a little over $1000 would buy 60 shares.

A $10 broker fee (if charged), paid half at purchase and half at sale, would cost us about $0.17 per share.

Subtracting that likely $0.17 brokerage cost from the $3.56 gross gain produces a net gain of $3.39 X 60 shares = $203.40 for over a 20% estimated net gain on the year.

You might choose to pounce on Fortescue Ltd It is a 41-year-old dividend-paying Australian mining company. Furthermore, the estimated $81.00 annual dividend income from $1k invested is 4.8 times greater than FSUMF’s recent $16.80 single share price.

The exact track of Fortescue Ltd’s ongoing future price and dividend will be determined by market action.

Remember the true value of any stock is best realized through personal ownership of shares.

More By This Author:

Current Analysis: Cementos Pacasmayo (CPAC)
Current Analysis: Veolia Environnement
Daily Stock Analysis: Park Aerospace