In what must surely rank as one of the biggest individual dividend payments ever received by an Australian, Andrew “Twiggy” Forrest is set to get almost $2 billion after his Fortescue Metals Group outlined a record profit.
Turbocharged by strong Chinese demand and high iron ore prices, Fortescue’s (ASX: FMG) profit soared 49% to $6.5 billion for the full year and the company announced a higher than expected final dividend payout of $1 a share.
That brings annual dividends to $1.76 a share, which is great news for Mr Forrest, who increased his stake in the company he founded and chairs in February to more than 36%.
A lot of cash heading to the Minderoo Foundation
His stake will earn total dividends of around $1.95 billion, with some of that cash earmarked to the Fortescue family’s philanthropic group the Minderoo Foundation.
Last year Mr Forrest and his wife Nicola’s dividends stood at $1.24 billion and the recent rapid rise in the Fortescue share price has boosted the value of his stake in the company above $20 billion.
Fortescue’s record result occurred despite the headwinds of the COVID-19 pandemic and export problems around cyclones as the iron ore company improved its operations and enjoyed a boost due to the pandemic’s effect on Brazil’s seaborne iron ore exports.
Mr Forrest has previously said that the Minderoo Foundation would use the dividends from Fortescue to continue its work fighting cancer, modern slavery and investing in education scholarships, ocean health, the arts and other causes.
Forrest has already invested more than $2 billion on philanthropy
Mr Forrest and his wife Nicola have already given more than $2 billion to their philanthropic group, the Minderoo Foundation, after being inspired by other philanthropists such as Warren Buffett and Bill and Melinda Gates who have donated large chunks of their wealth to charitable endeavours.
Minderoo Foundation is thought to directly hold 11.4 million of the 1.1 billion Fortescue shares that Mr Forrest declares in substantial shareholder filings to the ASX.
It has been a busy year for the Foundation, which has been heavily involved in helping the Australian Government respond to the COVID-19 pandemic, including buying medical equipment and RNA-based COVID-19 testing which has been widely used in controlling Victoria’s second wave of infections.
Foundation helped Australia respond to bushfires and COVID-19
The Minderoo Foundation has also offered immediate bushfire relief to Australians and has invested in long term plans for the country to react and plan for natural disasters.
Fortescue chief executive Elizabeth Gaines said the company had responded quickly to the COVID-19 pandemic so that mining operations could continue and deliver record revenue, earnings and net profit.
“Once again, Fortescue’s unique, differentiated culture underpinned the delivery of a year of outstanding performance for Fortescue, with record results achieved by the team across all of our key operating and financial measures while sustaining our clear focus on investment for future growth and development,” Ms Gaines said.
Fortescue Metal Group was initially not taken seriously by the big players in the iron-ore rich Pilbara – BHP (ASX: BHP) and Rio Tinto (ASX: RIO) and Mr Forrest’s boast that the company would become the “third force in iron ore’’ was often the subject of ridicule given the highly capital intensive nature of mining iron ore.
Fortescue has proved the knockers wrong
However, Mr Forrest proved his critics wrong with previously unprecedented Chinese demand for iron ore helping to fund the expensive rail, port and mine infrastructure the fledgling company needed before it even began to export iron ore.
Since those early beginnings, Fortescue has grown and matured significantly and now pays out substantial dividends.
Fortescue’s share price which was below $1 a share in early 2006 has since boomed and rose 67c or 3.72% a share just after the result was announced, taking it to $18.66 and a market capitalisation of more than $57 billion.