Dividends looking up

FORTESCUE Metals is likely to join mining giant Rio Tinto in raising dividends as the price of iron ore remains elevated.

The miner’s chief executive Nev Power said yesterday that with the company enjoying strong margins on the back of improved iron ore prices, it needed to balance returns for debt holders and shareholders.

“We flagged at the time of the interim dividend that we would be reviewing the payout ratio at the time of final dividend,” he said at the Diggers & Dealers conference in Kalgoorlie, Western Australia.

Fortescue currently has a payout ratio of 30 to 40 per cent of net profit, and declared a sharply higher interim dividend of 20¢ a share in February, representing 38 per cent of profit.

Earlier this month, Rio Tinto paid a record interim dividend after its underlying half-year profit more than doubled.