Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James & Team, I read that you like BHP in $42 range. I have been wondering if FMG at below $18 is a buy ie switch from BHP's current dividend yield of 5% to FMG for a higher % dividend yield of 10%. I realise FMG is a pure Fe stock v BHP a diversified minerals play. I would be interested in your thoughts. Thanks, Jeremy
Hi Jeremy,
A very valid question and a scenario we have considered in recent months. Fortescue (FMG) is effectively a “high Beta” play on iron ore and China – in other words it will tend to move in more aggressive fashion than BHP, in both directions. From a dividend perspective we have to look a few years ahead, not just the most recent payout:
Again these respective yields are determined by assumptions around respective commodity prices and the $A. We still like both stocks at current prices.
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