In this article, we discuss the 8 coal stocks that pay dividends.
Inflation numbers and rising interest rates have pushed investors away from growth stocks in recent months. However, even value plays are starting to come under pressure as recession fears at the stock market gather pace, pushing money managers firmly towards companies with established businesses that also pay a dividend. The panic is evident from the 11%, 18%, and 7% drop in the S&P 500, the NASDAQ Composite, and the Dow Jones Industrial Average. Stocks in the energy and mining sector seem to be weathering the storm better than others.
The shares of Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP) have all registered significant year-to-date returns. The mining sector has seen a massive influx in investment too, primarily due to the Russian invasion of Ukraine that has left countries scrambling to stockpile coal as they seek alternatives to natural gas and other Moscow exports. Dividend-paying coal firms are in hot demand as this coal boom takes off amid rising geopolitical tensions.
Apart from near-term factors, there are lots of long-term arguments for investments in dividend-paying companies as well. For example, a study by Hartford Funds, published this year, reveals that during a period from 1973 to 2021, companies paying dividends earned a 9.6% total annual return. This compares favorably to the returns of the benchmark S&P 500 over the time, which stands at around 8.2%. SPDR Americas research claims that dividend funds have added $43 billion in 2022 as of late June.
Our Methodology
The companies that operate in the coal sector and pay a dividend to shareholders were selected for the list. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
coal-1521718_1280
Coal Stocks that Pay Dividends
8. NACCO Industries, Inc. (NYSE:NC)
Number of Hedge Fund Holders: 4
Dividend Yield as of August 19: 1.78%
NACCO Industries, Inc. (NYSE:NC) engages in the natural resources business. It operates surface coal mines under long-term contracts for power generation companies. The company has a solid track record in the dividend space, with a history stretching back more than thirty-five years. In the past eight years, the payouts have registered consistent growth. In mid-May, the company declared a quarterly dividend of $0.2075 per share, an increase of more than 5% from the previous dividend of $0.1975 per share.
NACCO Industries, Inc. (NYSE:NC) posted earnings for the second quarter of 2022 on August 3, reporting earnings per share of $5.07 and a revenue of more than $37 million. The stock has climbed over 60% in the past year amid rising coal prices.
At the end of the second quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $15 million in NACCO Industries, Inc. (NYSE:NC), compared to 5 in the preceding quarter worth $16 million. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NACCO Industries, Inc. (NYSE:NC), with 263,517 shares worth more than $9 million.
Just like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP), NACCO Industries, Inc. (NYSE:NC) is one of the dividend stocks popular among hedge funds.
7. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Number of Hedge Fund Holders: 7
Dividend Yield as of August 19: 6.69%
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified natural resource company. On July 26, the company declared a quarterly dividend of $0.40 per share. This represented an increase of more than 14% from the previous dividend of $0.35 per share. Joseph W. Craft III, the CEO of the firm, has said that the firm is winning coal commitments at higher prices as global power generation firms scramble to bolster low stockpiles. These commitments bode well for the firm till 2025.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) posted earnings for the second quarter of 2022 on August 1, reporting earnings per share of $1.23, beating market estimates by $0.29. The revenue over the period was $616 million, up 70% year-on-year.
At the end of the second quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $82 million in Alliance Resource Partners, L.P. (NASDAQ:ARLP), compared to 5 in the previous quarter worth $94 million. Among the hedge funds being tracked by Insider Monkey, Delaware-based investment firm Magnolia Capital Fund is a leading shareholder in Alliance Resource Partners, L.P. (NASDAQ:ARLP), with 3.2 million shares worth more than $58 million.
In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Alliance Resource Partners, L.P. (NASDAQ:ARLP) was one of them. Here is what the fund said:
“Alliance Resource Partners, L.P. (NASDAQ:ARLP) rose 20.3% in the period. Alliance Resource Partners, L.P. (NASDAQ:ARLP) reported 1Q22 revenue of $460.9 million, +44.7% Y/Y, but down 2.7% from 4Q21, as a result of lower coal sales volume due to previously reported coal shipment delays. The company reported 1Q22 Adjusted EBITDA of $152.3 million, +61.5% Y/Y, and +16.9% from 4Q21, due to higher realized prices for coal and higher oil and gas royalties. The company also raised its 2Q22 cash distribution to $0.35 per unit, implying a 6.7% annualized based on the stock’s 7/13 closing price, and representing a 40% increase from the 1Q22 distribution of $0.25 per unit. Additionally, management now expects to deliver coal for $54-63 per ton in 2022, up 16.7% from January’s estimate of $49.05-51.25 per ton at the midpoint, and to sell as much as 37 million tons this year, compared to previous guidance for as much as 36.7 million tons.”
6. Ramaco Resources, Inc. (NASDAQ:METC)
Number of Hedge Fund Holders: 11
Dividend Yield as of August 19: 3.89%
Ramaco Resources, Inc. (NASDAQ:METC) produces and sells metallurgical coal. The firm is slowly trying to build a dividend profile. In mid-July, the company declared a quarterly dividend of $0.11 per share. This represented a decrease of more than 2.6% from the previous dividend. The dividend payments will be payable to shareholders by mid-September and late August. The company needs to register two consecutive years of dividend payouts to come at par with the sector median in this regard.
On August 10, B. Riley analyst Lucas Pipes maintained a Buy rating on Ramaco Resources, Inc. (NASDAQ:METC) stock and lowered the price target to $24 from $31, identifying higher capital spending and cost assumptions as some of the reasons behind the target drop.
At the end of the second quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $57 million in Ramaco Resources, Inc. (NASDAQ:METC), compared to 22 in the previous quarter worth $38 million. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Ramaco Resources, Inc. (NASDAQ:METC), with 1.1 million shares worth more than $15 million.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Ramaco Resources, Inc. (NASDAQ:METC) was one of them. Here is what the fund said:
“This quarter we sold our entire stakes in Ramaco Resources, Inc. (NASDAQ:METC). The reason is purely due to their lower upside potential after a very strong performance. In the case of Ramaco Resources, Inc. (NASDAQ:METC), as we mentioned in the previous quarterly letter, its high volatility allowed us to realize high returns on two different occasions (we exited the position and then re-entered it) in a short period of time, demonstrating the importance of rebalancing positions in our portfolio. Meanwhile, although with somewhat different dynamics, our investments in the metallurgical coal companies Ramaco Resources has strong returns and we sold them during the period.”
5. SunCoke Energy, Inc. (NYSE:SXC)
Number of Hedge Fund Holders: 13
Dividend Yield as of August 19: 4.46%
SunCoke Energy, Inc. (NYSE:SXC) operates as an independent producer of coke. The firm was founded in 1960 and is based in Lisle. The company is steadily building a dividend profile to make the shares more attractive for long-term investors. On August 2, the company declared a quarterly dividend of $0.08 per share, an increase of over 33% compared to the previous dividend of $0.06 per share. The dividend is payable to shareholders by early September. Two years of consistent payments in the dividend space will bring the firm at par with the sector median.
On August 2, SunCoke Energy, Inc. (NYSE:SXC) posted earnings for the second quarter of 2022, reporting earnings per share of $0.21, missing market estimates by $0.02. The revenue over the period was $501 million, up 37% year-on-year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in SunCoke Energy, Inc. (NYSE:SXC), with 3 million shares worth more than $20 million. Overall, at the end of the second quarter of 2022, 13 hedge funds in the database of Insider Monkey held stakes worth $47 million in SunCoke Energy, Inc. (NYSE:SXC), compared to 15 in the preceding quarter worth $60 million.
Along with Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP), SunCoke Energy, Inc. (NYSE:SXC) is one of the dividend stocks popular among elite investors.
In its Q4 2021 investor letter, Steel City Capital, an asset management firm, highlighted a few stocks and SunCoke Energy, Inc. (NYSE:SXC) was one of them. Here is what the fund said:
“SunCoke Energy, Inc. (NYSE:SXC) owns five cokemaking facilities in the U.S. capable of producing 4.2 million tons per annum (mtpa) of blast furnace coke. Coke is a key raw material used in the process of producing steel via the blast furnace method. In addition to its cokemaking operations, SXC owns a collection of marine terminals, the largest of which is the Convent Marine Terminal (CMT) in Louisiana. CMT has the capacity to transload 15 mtpa of coal and other industrial materials. In 2020, CMT accounted for 55% of U.S. thermal coal exports from the U.S. Gulf Coast and 15% of total U.S. thermal coal exports.
While the broader steelmaking industry recently benefitted from all-time high steel prices, resulting in record production levels, growing cash flow, and improving balance sheets, SXC has continued to trade with a free cash flow yield in excess of 20%, reflecting considerable concern about the company’s prospects. I believe there is a broad misunderstanding of the SXC story driven in part by shallow analysis of the company’s business model and cash flow prospects. I believe fair market value ranges from $14-$17, representing upside of 84-122% from current levels. What’s more, SunCoke Energy, Inc. (NYSE:SXC) represents an attractive takeout target for industry-consolidator Cleveland Cliffs (CLF), which at a minimum provides downside protection, but also offers a potential catalyst for value realization in the future. ” (Click here to see the full text)
4. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 19
Dividend Yield as of August 19: 12.25%
BHP Group (NYSE:BHP) is a diversified metals and mining firm. The firm has a stellar dividend history stretching back over thirteen years. The company has also grown the dividend payout in the past year. The sector median for consistent payouts in the sector is just two years, and thirteen years of payouts attests to the strength of the business model of BHP Group. On August 16, the firm announced a dividend of $1.75 per share, making a peak annual distribution of $3.25 per share.
On August 17, investment advisory Credit Suisse maintained a Neutral rating on BHP Group (NYSE:BHP) stock and raised the price target to GBP 2,300 from GBP 2,200. Analyst Danielle Chigumira issued the ratings update.
At the end of the second quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in BHP Group (NYSE:BHP), the same as in the preceding quarter worth $2.2 billion. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in BHP Group (NYSE:BHP), with 18 million shares worth more than $1 billion.
3. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 27
Dividend Yield as of August 19: 22.27%
Vale S.A. (NYSE:VALE) markets iron ore products. The firm posted earnings for the second quarter of 2022 on July 29, reporting earnings per share of $1.32, beating market estimates by $0.52. The revenue over the period was $11.6 billion, down more than 33% compared to the revenue over the same period last year and missing analyst expectations by $450 million. In February, the firm had declared an interim dividend of $0.73 per share. More than $3.5 billion were disbursed to shareholders through the payout.
On June 22, Morgan Stanley analyst Carlos De Alba maintained an Equal Weight rating on Vale S.A. (NYSE:VALE) stock and lowered the price target to $16 from $22, noting that decreasing iron ore prices would weigh on the shares of the firm in the near term.
At the end of the second quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Vale S.A. (NYSE:VALE), the same as in the preceding quarter worth $2.3 billion. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Vale S.A. (NYSE:VALE), with 22 million shares worth more than $324 million.
In its Q1 2022 investor letter, Grantham Mayo Van Otterloo & Co. LLC, an asset management firm, highlighted a few stocks and Vale S.A. (NYSE:VALE) was one of them. Here is what the fund said:
“Let’s look at Vale S.A. (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. 4 What did the company do with all that cash? Last year, Vale S.A. (NYSE:VALE) paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”
2. Arch Resources, Inc. (NYSE:ARCH)
Number of Hedge Fund Holders: 44
Dividend Yield as of August 19: 0.63%
Arch Resources, Inc. (NYSE:ARCH) produces and sells coal. The firm is making inroads in the dividend space as it seeks to woo long-term investors. Two years of consistent payouts would bring the firm in line with the sector median in this regard. In late July, the company declared a dividend of $6 per share, which is equivalent to 50% of the second quarter discretionary cash flow, per Paul A. Lang, the CEO of the firm. In late April, the firm had declared a quarterly dividend of $0.25 per share, in line with previous.
On July 29, B. Riley analyst Lucas Pipes maintained a Buy rating on Arch Resources, Inc. (NYSE:ARCH) stock and lowered the price target to $221 from $234, noting that the recent weakness in the shares was a buying opportunity.
At the end of the second quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $723 million in Arch Resources, Inc. (NYSE:ARCH), compared to 45 in the previous quarter worth $1 billion.
In its Q2 2022 investor letter, Kingdom Capital Advisor, an asset management firm, highlighted a few stocks and Arch Resources, Inc. (NYSE:ARCH) was one of them. Here is what the fund said:
“Arch Resources, Inc. (NYSE:ARCH): When we began following Arch, we focused on their metallurgical coal segment and viewed their thermal coal segment as a source of potential upside. However, especially since Russia’s invasion of Ukraine, energy security has surged into focus and Arch’s thermal operation now faces higher spot prices than their met sales. Arch retired most of their convertible debt during Q2, another example of their strong commitment to delivering shareholder value. Estimates for Q2 suggest Arch Resources, Inc. (NYSE:ARCH) should earn over $20/share vs a $130 share price, and they remain committed to distributing half of their cash flow via dividends.”
1. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 46
Dividend Yield as of August 19: 1.12%
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. The company has one of the most impressive dividend profiles in the coal sector. In the past eleven years, it has consistently paid a dividend to shareholders. The sector median in this regard is just two years. This payout has registered growth in the past twelve months. On July 27, the firm declared a quarterly dividend of C$0.125 per share, in line with previous. The dividend is payable to shareholders by mid-September.
On August 16, investment advisory Stifel maintained a Buy rating on Teck Resources Limited (NYSE:TECK) stock and lowered the price target to C$59 from C$62. Analyst Alex Terentiew issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Soroban Capital Partners is a leading shareholder in Teck Resources Limited (NYSE:TECK) with 13 million shares worth more than $416 million. Overall, at the end of the second quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Teck Resources Limited (NYSE:TECK), compared to 56 in the preceding quarter worth $2.6 billion.
You can also take a peek at Why These 10 Stocks Are Trending on Monday and 10 ETFs to Buy and Hold for the Next 10 Years.
Follow Insider Monkey on Twitter
Suggested Articles:
- Hedge Funds Are Selling Palantir Technologies (PLTR) and 9 Other Tech Stocks
- 9 Stocks to Buy Now According to Munir Javeri’s 3G Sahana Capital Management
- 10 Most Popular NFTs in the World
Disclosure. None. 8 Coal Stocks that Pay Dividends is originally published on Insider Monkey.
