Australia's Fortescue reported a rise in annual profit on Wednesday, boosted by higher iron-ore shipments from its Iron Bridge project, and announced a larger-than-expected final dividend, sending its shares higher.

The world's fourth-largest iron-ore miner has been building out a green energy business funded largely from its profits in iron ore, raising analyst concerns that it could trim its dividend payout to funnel more cash into the business.

Fortescue achieved its third-highest earnings in company history, with total iron ore shipments reaching 191.6-million tonnes in fiscal 2024 as operations at its Iron Bridge magnetite project have ramped up.

Shares in the miner rose as much as 1.72% to A$18.95, hitting their highest since August 1, while the mining sub-index.slipped up to 0.8%.

Underlying net profit after tax was $5.66-billion for the year ended June 30, compared with $5.52 billion reported a year earlier. The figure missed a Visible Alpha consensus estimate of $6.11-billion.

The earnings were slightly below expectations, primarily due to higher-than-expected depreciation and amortization charges of $2.14-billion, while other aspects of the results appeared to be in line with expectations at first glance, analysts at Jarden said in a client note.

Fortescue declared a final dividend of A$0.89 per share, down from last year's A$1.00 apiece, but higher than a Visible Alpha consensus estimate of A$0.85.

"It's a pretty much in-line result. Balance sheet is strong, so they can support a slightly higher payout ratio. The headline numbers look fine with a slight beat on dividend," said Glyn Lawcock of Barrenjoey.

Fortescue maintained its dividend payout ratio at 70%, to the top end of its 50%-80% target range, allaying analyst concerns that it would cut its payout ratio to fund its green energy ambitions.

The company's strategy is bolstered by improved market conditions, with hematite average realized prices rising to $103 per dry metric tonne (dmt) from $95 dmt a year earlier.

Fortescue is capitalising on the higher prices for its high-grade iron ore to finance its green energy business expansion.

Fortescue's board has approved the acceleration of two hydrogen projects - Holmaneset in Norway and Pecém in Brazil - to the feasibility study stage, it said.