ASX 200 mining stock delivering profitable decarbonisation
This ASX 200 mining giant represents a good opportunity for investors who are in hunt for blue chip names with good dividend yields, especially after the recent pullback in the stock.
Fortescue Limited (ASX: FMG)
is one of the largest iron ore producers in the world and at the time of writing, has a market capitalisation of $60.5 billion.
The company in H1 FY26 reported revenue of US$8.4 billion with underlying EBITDA of US$4.5 billion and net profit after tax of US$1.9 billion which shows that it achieved exceptional profitability for the period.
The company maintained an EBITDA margin of 53% and it generated operating cash flow of US$3.2 billion and free cash flow of US$1.5 billion which supports dividends and also supports future growth investments.
Fortescue during the half year shipped 100.2Mt of iron ore and achieved industry leading C1 costs of US$18.64 per wet metric tonne which shows its advantage of being a low-cost producer.
The company has paid fully franked dividends on a semi-annual basis for many years and it currently offers an annual dividend yield of 6.21% which makes the stock attractive for passive income investors.
Management guidance for FY26 includes total shipments of 195–205Mt and the company will also invest in growth energy and decarbonisation projects which include solar wind and battery infrastructure.
The company is also making large investments in green energy, electric mining equipment and decarbonisation projects which could become a major long-term growth driver.
The stock has declined 10.72% year-to-date because the stock had earlier risen to high levels during the commodities boom and later iron ore prices cooled which caused a pullback.
Fortescue uses a dividend payout ratio of around 65% of net profit which ensures shareholders receive a large portion of earnings as dividends.
Steady steel demand from China and strong customer relationships will support long-term demand for its iron ore division.
The stock is still suitable for investors who want blue chip companies which also pay healthy dividends in their portfolio.
(Source: Company Announcements)
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