Does this ASX All Ordinaries share really have a dividend yield of 29% right now?

It sounds almost too good to be true.

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Shut the front door. There's no way an ASX All Ordinaries Index (ASX: XAO) share has a 29% dividend yield right now… is there? Well, time to check out the Base Resources Ltd (ASX: BSE) share price to find out.

Base Resources is an ASX resources share specialising in the production of mineral sands. It has operations in a few countries, including Australia, Kenya, and the United States.

Today, Base Resources is trading at 20.5 cents per share at the time of writing, down a nasty 4.65% so far this session.

This company has paid out two dividends over the past 12 months. The first was the interim dividend of 3 cents per share from March. The second was the final dividend worth 3 cents per share that investors received in September. Neither payment came with franking credits. So that's an annual total of 6 cents per share for Base Resources.

On today's share price of 20.5 cents, this does indeed give Base Resources a trailing dividend yield of 29%.

Hallelujah! So we should all run out and buy Base Resources shares right now? Who wouldn't want their capital back after just three-and-a-bit years, after all?

Is Base Resources really offering a 29% dividend yield right now?

Well, not so fast.

A trialling dividend yield is always just that – trailing. It reflects only the past, not the future. The reality is that no Base Resources investor has enjoyed a 29% dividend yield over the past year.

That's because the Base Resources share price has plummeted by almost 38% in 2022. It was at more than 33 cents per share back in early January, a far cry from the 20.5 cents we see today.

So we can probably conclude that the market is predicting that Base Resources will not be able to fund dividends at 2022's levels going forward. Otherwise, it wouldn't have sent Base Resources shares down to a level that gives the company a trailing dividend yield approaching 30% – a level that is obviously well above a conventional yield.

We'll have to see if the market is right on this. If this company pays out 6 cents per share in dividends next year, it will be very interesting to see where the Base Resources share price goes.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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