Year to date spot iron-ore prices have averaged at US$167/t with Fortescue Metal Group’s basket price averaging at circa US$150/t. This is 30% higher than the first half of FY21.
Macquarie believes the group’s second-half earnings could exceed US$6bn with a final dividend of more than $2 per share, translating to a yield of 15%.
But that’s not all. The broker is of the view if the spot prices persist, Fortescue Metals Group may have the capacity to deliver dividend yields of circa 19% for both FY22-23.
Outperform rating with the target dropping to $25.50 from $26.50.
Sector: Materials.
Target price is $25.50.Current Price is $22.68. Difference: $2.82 – (brackets indicate current price is over target). If FMG meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
