Is the 27% dividend yield on Yancoal shares legit?

Is the Yancoal dividend real?

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Key points
  • The Yancoal dividend yield is significant based on the company's share price
  • However, Yancoal shares have fallen in the year to date and last 12 months 
  • Ynacoal shares are up 4% today 

The Yancoal Australia Limited (ASX: YAL) dividend yield is among the highest on the ASX.

Yancoal shares have shed 15% in the last year and are currently fetching $4.61, up 4%.

Let's take a look at the Yancoal dividend yield in more detail.

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles.

Image source: Getty Images

Is the Yancoal dividend yield real?

Firstly, it's worth taking into account the dividend yield can change with the share price. If a share price drops, then the dividend yield can be inflated.

Secondly, the Yancoal dividend can change over time based on company performance, market sentiment for coal and the coal price.

Taking a look at the Yancoal dividend, the company paid a fully franked final dividend of 70.4 cents per share in April this year and an interim dividend of 52.71 cents in September last year. This equates to total dividends of about $1.23.

This represents a trailing dividend yield of 26.7%, based on the current share price.

A $10,000 investment in Yancoal shares, would deliver a passive income of $2,670 a year based on this dividend yield.

Looking ahead, the coal price and production could impact the Yancoal share price and dividend yield in the future.

In a research report released today, ANZ commodity strategists Daniel Hynes and Soni Kumari said the coal market is facing "multiple headwinds", including lower gas prices, shipments from Europe and slowing industrial activity. However, Asian heat waves may be a positive for coal.

Commenting on this outlook, the strategists said:

Stockpiles have grown in key consuming countries, but heatwaves in Asia could provide some support for coal demand.

Yancoal share price snapshot

The Yancoal share price has declined 15% in the last year and 12% in the past month.

This ASX coal share has a market cap of more than $6 billion based on the current share price.

Motley Fool contributor Monica O'Shea 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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