2 Dividend-Paying Mining Stocks To Add To The Watchlist

For many investors, dividends remain one of the most rewarding aspects of building wealth. A company that consistently pays dividends not only signals financial strength but also provides investors with steady cash flows, making it a reliable choice for income seekers. While some sectors are known for their high dividend payouts—think banks and utilities—the mining sector in Australia has also proven to be a consistent contributor to dividend income.

Two names that stand out in this space are Fortescue Metals Group (ASX: FMG) and Rio Tinto Ltd (ASX: RIO). Both companies have managed to balance capital investment for long-term growth with strong dividend distributions for shareholders. In FY25, their latest updates confirmed that dividends remain a central part of their capital allocation frameworks. Let’s take a closer look at what makes these stocks attractive for income investors.

Fortescue Metals Group (FMG): Payout Discipline Through the Cycle

Fortescue Metals Group has built its reputation as one of the world’s lowest-cost iron ore producers. Even in a year where iron ore prices softened and investment commitments grew, FMG stuck to its stated dividend policy of paying out between 50% and 80% of underlying net profit after tax (NPAT).

1. Dividend highlights: For FY25, FMG declared a final dividend of $0.60 per share (ex-date 1 September 2025; pay date 26 September 2025). This brought the total FY25 dividend to $1.10 per share, representing a 65% payout of NPAT. The dividend was fully franked, meaning Australian investors will also benefit from tax credits.
2. Operational performance: The company posted record FY25 iron ore shipments from its Pilbara operations and even lifted its shipment target for FY26. This shows that operational momentum remains strong, ensuring that dividend payments can continue even if profit margins narrow.
3. Shareholder programs: FMG continues to run its dividend reinvestment plan (DRP), giving investors the option to reinvest payouts back into the company.

Why FMG is worth watching: The transparency of its payout policy, combined with fully franked dividends and reliable operational delivery, make FMG a core income stock for investors who want exposure to iron ore without sacrificing dividend cash flows. Its strong cost leadership adds another layer of resilience, ensuring that even during weaker commodity price cycles, FMG can still deliver returns.

Rio Tinto (RIO): Resilient Payouts Backed by Tier-One Projects

Rio Tinto, one of the world’s largest diversified miners, continues to stand out for its disciplined dividend framework. Unlike Fortescue, which operates primarily in iron ore, Rio Tinto’s portfolio is broader, spanning iron ore, copper, aluminium, and other commodities. This diversification provides an added layer of stability to its earnings and dividend distributions.

• Dividend highlights: Rio Tinto declared a 2025 interim dividend based on its through-the-cycle policy of paying out 50% of underlying earnings. The ex-dividend date was set for 14 August 2025, with the payment scheduled for 25 September 2025.
• Currency aspect: Although Rio declares its dividends in US dollars, ASX investors receive their payments converted into Australian dollars. For FY25, currency conversion was set for mid-September, ahead of the payment date.
• Operational milestones: A major highlight this year was Rio’s first shipment from the Simandou project, one of the world’s largest undeveloped iron ore deposits. Alongside this, continued progress in its Pilbara iron ore operations and the Oyu Tolgoi copper project demonstrates that Rio is not only paying dividends today but also building future earnings capacity.

Why Rio is worth watching: Investors can count on Rio’s semi-annual dividend cadence and the stability provided by its diversified operations. Its disciplined 50% payout ratio, combined with long-life, low-cost assets, makes Rio’s dividends predictable and sustainable. Furthermore, the delivery of large growth projects like Simandou and Oyu Tolgoi ensures that Rio’s capacity to reward shareholders should expand in the coming years.

Gold Rush 2.0? Why Iron Ore Giants Still Matter

While 2025 has seen renewed enthusiasm around gold, with prices rallying and headlines highlighting the so-called “Gold Rush 2.0,” diversified iron ore majors like Fortescue and Rio Tinto remain the bedrock of Australia’s income-paying mining sector.

What makes them stand out is not just their ability to generate free cash flows but also their commitment to disciplined payout frameworks. Both companies managed to maintain meaningful dividends in FY25 despite softer commodity pricing, proving their resilience. Importantly, their projects under development—whether it’s FMG’s expanding shipment volumes or Rio’s progress at Simandou—are geared to refresh earnings and sustain dividends well into the next cycle.

Key Dates to Note

For income investors, timing matters. Here’s a quick reference to the upcoming dividend events for both companies:

Fortescue (FMG):

• Final dividend of $0.60 per share
• Ex-dividend date: 1 September 2025
• Record date: 2 September 2025
• Payment date: 26 September 2025
• Total FY25 dividends: $1.10 per share, fully franked

Rio Tinto (RIO):

• Interim dividend at 50% of underlying earnings
• Ex-dividend date: 14 August 2025
• Currency conversion: 16 September 2025
• Payment date: 25 September 2025

What to Watch Going Forward

While both companies look attractive for dividend investors today, future performance depends on a few important drivers:

Fortescue (FMG): Watch for shipment volumes in FY26, cost management in Pilbara operations, and how the balance sheet evolves after higher investment spending in FY25. Any change in the 50–80% payout policy would also be key for dividend expectations.

Rio Tinto (RIO): Investors should keep an eye on Pilbara production costs, the ramp-up pace at Simandou, and contributions from copper assets like Oyu Tolgoi. These will determine Rio’s ability to maintain or even grow distributions.

The Bottom Line

For investors looking to combine exposure to global resources with consistent dividend payouts, Fortescue Metals Group and Rio Tinto deserve a place on the watchlist. Both companies are committed to disciplined dividend frameworks, supported by world-class iron ore operations and growth projects that will fuel future cash flows.

While market cycles will always influence commodity prices, the ability of FMG and Rio to generate cash today while investing in tomorrow makes them standout dividend payers. Whether you’re chasing immediate income through fully franked dividends or seeking long-term stability backed by global scale, these two mining giants remain dependable choices in the Australian market.

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