FMG - Fortescue Ltd

[joeno]

A bit off topic - if say I have 1000 shares of Fortescue how much $$$ should i see in my trading account after the dividends are paid out?

I'm using IB (interactivebrokers) who are international, so don't want them to be taxing me incorrectly.

 

[Value Collector]

A bit off topic - if say I have 1000 shares of Fortescue how much $$$ should i see in my trading account after the dividends are paid out?

I'm using IB (interactivebrokers) who are international, so don't want them to be taxing me incorrectly.

$600 Australian.

Eg. 60 cents for each share you own.

Unless for some reason there is a withholding tax applied, say for example you haven’t provided them with your tax file number, they may withhold tax.

 

[Value Collector]

The iron ore price looks to be strong for quite a while, and the discount of low grade is sitting near historical lows.

 

[rnr]

A bit off topic - if say I have 1000 shares of Fortescue how much $$$ should i see in my trading account after the dividends are paid out?

I'm using IB (interactivebrokers) who are international, so don't want them to be taxing me incorrectly.

From the comments I've seen with regard to IB they pay you the franking credits.
If that is the case then approx $857.14.

 

[joeno]

From the comments I've seen with regard to IB they pay you the franking credits.
If that is the case then approx $857.14.

Looking at my previous dividends paid, they are definitely not paying me the franking credits. They pay just the declared dividend. How do I claim the franking credits from them?

 

[rnr]

@joeno

You may have a better chance of getting a response if you post this question in the IB thread.

 

[Value Collector]

Looking at my previous dividends paid, they are definitely not paying me the franking credits. They pay just the declared dividend. How do I claim the franking credits from them?

Are you an Australian resident for tax purposes?

 

[joeno]

Are you an Australian resident for tax purposes?

Yes.

 

[Value Collector]

Yes.

In that case the franking credit is applied to your tax return, and you get a refund if the credit is higher than the tax due.

For example, on 1000 shares the following happens.

You receive $600 cash + $257 franking credit (That’s just a tax credit, not given in cash)

When you do you tax return both amounts are added as taxable income to your return.

So your taxable income rises by $857 (divy and franking combined), but you also get a credit for tax already paid of $257 (the amount of the franking credit)

So if you are on a 0% tax bracket, you won’t owe any tax on that $857 so you will get a $257 tax refund of your franking credit.

If you are on a 30% tax bracket, the franking credit will offset the whole $257 tax owed, so you won’t get a refund but you won’t get a tax bill either.

However if you are on a 45% tax bracket, you will owe $385 tax on the $857, but they will deduct the $257 franking credit first and send you a bill for the remaining $128.

———-
Franking credits are just a tax credit for the company tax already paid by the company on the profits they are distributing as dividends, they are used to prevent double taxation, and to ensure when those company profits hit the investors tax return, they are taxed at the appropriate rate for that investor eg at his or her tax bracket.

Eg. If a company earns $100, they pay $30 company tax which leaves $70 available to pay dividends.

When that $70 gets paid as a dividend, it comes with a $30 franking credit.

So, the total $100 is added to the investors tax return as income, but a $30 credit is also added to represent the tax already paid.

 

[Ann]

Fortescue pegs more copper ground near Olympic Dam via Strategic Energy and Tasman Resources farm-in

Twiggy-backed Fortescue Metals (ASX: FMG) has made another copper grab with the iron ore miner to farm into Strategic Energy Resources (ASX: SER) and Tasman Resources’ (ASX: TAS) iron-oxide-copper-gold assets in South Australia, near BHP’s renowned Olympic Dam operation and Oak Dam West discovery.


With a dry pipeline of advanced copper projects and the mineral deemed critical for the surging lithium-ion battery and electric vehicle sectors, mining majors such as BHP’s (ASX: BHP) and Rio Tinto (ASX: RIO) have both been scooping up prospective copper ground across South Australia and Western Australia in recent years.


Not to be left behind, Andrew Forrest’s “Twiggy’s” Fortescue has also been pegging up copper ground in both regions over the last 18 months, and its agreement to farm-in to Strategic’s Myall Creek copper-gold project in South Australia will consolidate some of its holding in South Australia. More...

 

[notting]

Massive reversal as did, RIO and BHP.
At first I thought it must have been the Diggers and Dealers conference but since the other two did the same thing I guess it was also above $7 peg of the Yuan that surprised to the upside rather than a continuation of last nights historic Yuan below 7 panic attack.

 

[notting]

Price of FMG IO as of yesterday.
China Imported Iron Ore Price (Fe: 58%, CFR)(SHCNIOI) - 90.83USD/t【734】
FMG trades it's lower grade IO at a discount to the FE 58% usually of about 10%

Should FMG shareholders be worried?
Well not really given the margin is still very healthy all the way down to about US$45.
Not that market will trade beyond the sentiment.

China could be in deep trouble if it continues to bury itself in infrastructure and apartment madness to try to prop up 'the appearance of it's economy to it's serfs and the world which it may continue to do until local debt massively exceeds it's international treasury holdings and the hole thing collapses.
'Saving face' could be the ultimate downfall of the Chinese

Regardless I'd be surprised if FMG did not have at least one more dividend bonanza left in it.
Although it would seem smarter if it bought some other downtrodden miner/s instead.

 

[bigdog]

https://www.smh.com.au/business/com...-surges-on-iron-ore-boom-20190826-p52kpd.html

'Twiggy' Forrest's $1.24b day: Mining magnate cashes in as Fortescue pays record dividend

Australian miner Fortescue Metals Group will pay out a record annual dividend to shareholders, sending more than $1 billion into the bank account of mining magnate Andrew "Twiggy" Forrest, following a bumper year boosted by booming iron ore prices.

With a 35 per cent stake in the company, Andrew Forrest, the company's founder and chairman, is set to pocket $1.24 billion from the full-year dividends

 

[InsvestoBoy]

https://www.abc.net.au/news/2019-10...peal-over-pilbara-native-title-claim/11615706

Mining magnate Andrew Forrest faces a compensation fight after losing an appeal against a WA native title ruling over a huge tract of ore-rich Pilbara land.

 

[Value Collector]

Very proud to have been a share holder of this company for the past 5 years.

 

[Value Collector]

So we broke through $10 today.

Refelecting back to a few years ago when we were at $2, and I was trying to convince people it was worth at least $7, Congrats to anyone that went agains the status quo and took my advice and loaded up.

 

[dat111]

So we broke through $10 today.

Refelecting back to a few years ago when we were at $2, and I was trying to convince people it was worth at least $7, Congrats to anyone that went agains the status quo and took my advice and loaded up.

I first purchased in 2004....unfortunately sold 1/4 of my position end of last December as I wanted to take a loss to offset other long term capital gains. Was sitting out a month as required to buy back in and Vale has their flood causing FMG to go up....Thinking that the price was going to come back down after the Vale issue was worked out but I was wrong...I am still waiting and smiling.....

 

[joeno]

i did follow the advice and bought a moderate amount (not huge, not tiny) around the $1.80-$2 range. Wish i bought more +500% gain in 5 years. Not too shabby.

Any of you guys planning to sell? I think there's room to grow further... but i don't see the potential as being "infinite" or having the same gains in the next 5 years as the past 5 years.

 

[barney]

Don't hold FMG … but anyone who dips in for $70 million like Twiggy has done to help other Aussies is a legend

 

[dat111]

Don't hold FMG … but anyone who dips in for $70 million like Twiggy has done to help other Aussies is a legend

First Go Twiggy...Love a guy who is willing to risk a fortune to make a larger fortune and give me opportunity to make money with him....

Here is my take on what could happen in the future for FMG but we must first remember why the price was so low. When the price was less than $2/share investors (me) were/was worried that another entity would purchase FMG and I would not realize any return and more than likely a loss. The concern was attributed to the price of Iron Ore being low and the projected price of iron ore in the future was going down instead of up. So the market price for iron ore from 2015 - 2020 was projected to be $35/wmt-$45/wmt. FMG was producing in the high twenties as I remember. So the difference did not allow FMG to make their debt payment when they came due. This caused them to push the debt out further. This allowed the price to recover a bit. Then FMG dropped their cost of producing the ore to the high teens. This raised the price/share to the $3 dollar range as there was less of a chance to go bankrupt but they still weren't making a bunch of money. But over the last five years, the price of iron ore especially in 2019 was way above what was prognosticated and the cost of production was further reduced in 2018 to the low teens. This allowed FMG to pay down the debt...heck at one time it was about $9B now FMG publishes their net debt as $0.7B.

So the question is do you trust Twiggy to use the profits generated in the future to help FMG grow or at least be distributed to the ownership. I think FMG paid out a little over a $1 in dividend payments in 2019 and paid down a bunch of debt. Since the debt is going to be gone, if he decided to payout $2 in dividend payments what would the price be with no debt and little risk of forced sale of the company. I think that it is too early to get out of this stock as the future appears to be very bright. I wouldn't be surprised if we see a 15%-20% return each year for the next 5 years with very little down side risk. This obviously is not a 500% gain over the next 5 years but in my book an excellent investment.