This Coal Stock Is Paying 13.7% — Is It Worth Buying?

Support Independent Journalism with a donation (Paypal, BTC, USDT, ETH)
Spread the love

Searching for yield in today’s stock market can be challenging — the current average dividend yield of S&P 500 companies is 1.5%.

But for those who are willing to look beyond the most popular tickers, companies with much bigger payouts exist.

Case in point: Alliance Resource Partners (NASDAQ:ARLP) is a diversified producer and marketer of steam coal to major U.S. utilities and industrial users. It pays quarterly distributions of 70 cents per share, translating to an annual yield of 13.7%.

Alliance started its mining operations in 1971. Today, it’s the second-largest coal producer in the eastern United States.

Don’t miss:

Alliance has approximately 580.7 million tons of proven and probable coal mineral reserves and 1.17 billion tons of measured, indicated and inferred coal mineral resources in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. In 2022, it sold 35.6 million tons of coal.

Coal no longer grabs the spotlight in the investment arena. Environmental concerns, the rise of renewable energy sources and tightening government regulations have reduced coal’s influence in the energy matrix.

But the industry hasn’t breathed its last — just take a look at Alliance’s latest earnings report.

Supporting Oversized Distributions

In the second quarter of 2023, Alliance generated $641.8 million of revenue, representing a 3.5% increase year over year.

The partnership said that its top-line growth was “driven primarily by higher coal sales price per ton, which rose by 5.7%, partially offset by lower oil and gas royalty prices.”

At the bottom line, Alliance earned a net income of $169.8 million, or $1.30 per unit — an improvement from the $163.5 million, or $1.23 per unit generated in the year-ago period.

Alliance generated $173.7 million in distributable cash flow in the second quarter. Since the partnership paid $90.9 million in distributions for the quarter, it had a distribution coverage ratio of 1.91 times.

In the latest earnings conference call, Alliance’s Chairman, President and CEO Joseph Craft III said, “We plan to sustain our distribution at the $0.70 a quarter.”

Alliance has also placed its bets beyond just fossil fuels.

Earlier this month, the partnership announced that it has made a $25 million strategic investment in Ascend Elements Inc., a U.S.-based manufacturer and recycler of sustainable, engineered battery materials for electric vehicles.

Upside After A Choppy Ride?

Alliance Resource stock is up 3.6% in 2023 but down 20.7% over the last 12 months.

Over the years, investor sentiment toward coal has undergone a noticeable shift. As global emphasis on sustainability and clean energy grows, some investors are viewing coal with increasing skepticism, given its environmental impact and contribution to climate change.

That said, Benchmark Co. analyst Nathan Martin has a Buy rating on Alliance Resource and a price target of $28. Considering that the stock currently trades at $20.40, the price target implies a potential upside of 37%.
Remember, dividends are not carved in stone and stock prices can fluctuate wildly. If you don’t like such volatility, you might want to consider reliable income plays outside the stock market — such as investing in rental properties with as little as $100 while staying completely hands-off.

Read next:

Don’t miss real-time alerts on your stocks – join Benzinga Pro for free! Try the tool that will help you invest smarter, faster, and better.

This article This Coal Stock Is Paying 13.7% — Is It Worth Buying? originally appeared on


© 2023 Benzinga does not provide investment advice. All rights reserved.

EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email [email protected]

Support Independent Journalism with a donation (Paypal, BTC, USDT, ETH)

News Agencies

About Author

The latest news from the News Agencies

You may also like

exotic expansion llc best stock picking services

Exotic Expansion LLC: Is it one of few Best Stock Picking Services?

Spread the loveExotic Expansion LLC: You may have wondered once in a life that if you had someone who can
investing in cryptocurrencies

Are you investing in cryptocurrencies? 4 important points before you invest

Spread the loveInvesting in cryptocurrencies Driven by financial backers’ energy, the cryptographic money market as of late crossed the $3