Fortescue Metals Group is distributing over $1 billion worth of dividends to shareholders ahead of Labor’s plan to crack down on franking credits should it win Saturday’s federal election.
The company’s board has declared a fully franked dividend of 60 cents a share, which comes on top of the 30 cents Fortescue declared in February.
Fortescue’s share price yesterday jumped by 7.44 per cent on a day when the ASX 200 dropped by almost 1 per cent.
The dividend will be paid to shareholders on June 14 and takes into account Fortescue’s year to date earnings, forecast performance for the remainder of the 2019 financial year and the iron ore price outlook.
Iron ore prices rose by 47 per cent over the March quarter, lifting Fortescue’s realised price to $US71 ($102) a dry metric tonne.
Fortescue attributed the gains to continued demand in Chinese steel production, which grew by 9.9 per cent in the first quarter of 2019 compared to the previous year.
Supply disruptions in Brazil and Australia have also led to significant drawdowns in iron ore inventories at Chinese ports, according to Fortescue.
The company believes its near-term outlook remains positive due to a plan to increase the delivery of higher grade products such as West Pilbara Fines and strong demand for iron ore.
“The ability to deliver this increased return to our shareholders reflects the success of our integrated operations and marketing strategy, enhanced product mix as well as the strength of demand for iron ore,” Fortescue chief executive Elizabeth Gaines said.
“Our investment in growth through the Eliwana and Iron Bridge projects represents a total investment of $US3.875 billion and positions Fortescue to deliver on our strategy of a majority of our products being greater than 60 per cent iron grade.”