Kalkine: ASX200 Spotlight: Why (ASX:FMG) Fortescue Shares Are Catching Attention in the Materials Sector

June 11, 2025 02:06 PM AEST | By Team Kalkine Media

Kalkine: ASX200 Spotlight: Why (ASX:FMG) Fortescue Shares Are Catching Attention in the Materials Sector — Image source: Shutterstocks

Fortescue’s Strong Foundation

Established in 2003 and based in Perth, Fortescue Ltd is one of the world's largest iron ore producers. It ships over 190 million tonnes of iron ore annually from its operations in Western Australia’s Pilbara region. Beyond iron ore, the company is actively exploring across geographies such as Argentina, Brazil, Kazakhstan, Chile, and other parts of Australia. The focus is increasingly shifting toward high-demand materials like lithium, copper, and rare earths.

This strategic diversification positions Fortescue to benefit from the soaring global demand for minerals critical to electric vehicles, batteries, and solar energy systems — all cornerstones of the clean energy transformation.

Materials Sector Momentum

The S&P/ASX200 Materials Index (ASX:XMJ) has delivered a capital growth rate of 4.67% annually over the past five years. While this trails the broader S&P/ASX200's return of 8.05%, the materials sector continues to offer long-term opportunities due to its indispensable role in global infrastructure and energy markets.

Among the sector’s standout features is dividend performance. Fortescue’s dividend yield has averaged 10.52% annually over the last five years. Presently, it stands at approximately 12.19%, reflecting both solid cash flow and a dip in share price. Such high yields have helped Fortescue secure a spot on lists of popular ASX dividend stocks.

Dividend Valuation and Sector Perspective

A yield above its historical average suggests that Fortescue is potentially undervalued relative to its income-generating potential. While mining sector dividends can be cyclical — influenced by global commodity prices — the current payout level signals investor interest in resilient cash flows.

Furthermore, companies such as (ASX:BHP) and (ASX:RIO) are also investing in assets aligned with future-focused demand, making materials players key participants in the new energy economy.

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