Andrew Forrest will receive a $102 million dividend cheque after Fortescue Metals Group's board decided its cost cutting and a stronger than expected iron ore price were more than able to handle the company's $US10.5 billion ($11.7 million) debt pile.
The declaration of a 10c final dividend caught investors by surprise given Fortescue's focus on cutting its debt had led the company to withhold a likely 4c interim dividend.
"We see the dividend as appropriate for the stage that we are at," Fortescue chief executive Nev Power said.
"We can do both, repay debt and pay dividends."
Mr Forrest, who founded Fortescue 10 years ago and remains chairman with a 32.8 per cent stake, is the biggest beneficiary of the dividend news, which was lapped up by other investors who marked the company's shares up 17c to $4.26.
The dividend declaration came as Fortescue reported a $US1.56 billion full-year net profit, up 12 per cent.
With most of its capital-intensive expansion to 155 million tonnes a year complete, and cost cutting and operational efficiencies taking effect, Fortescue ended June 30 with $US2.2 billion cash.
In its outlook statement, Fortescue said its debt structure was flexible and allowed for various ways to reduce the burden.It pointed to the prospect of a "significant increase in operational cash flow" as production ramped up to 155mtpa later this year and more customer prepayments as ways to cut debt.