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

It sounds almost too good to be true.

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published November 29, 2022 2:36 pm AEDT

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?

A person with a round-mouthed expression clutches a device screen and looks shocked and surprised. — Image source: Getty Images

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.

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