Guess which ASX lithium stock just hit 7% dividend yield?

Lithium shares are not usually known for high income, but this one's looking attractive now after a fall in valuation.

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Lithium has been a hot investment theme the past few years but global prices for the commodity have plunged this year.

According to Trading Economics, last November the lithium carbonate price was close to 600,000 CNY per tonne but has now slipped down to 163500 CNY.

That's more than a 70% drop, and consequently most ASX lithium shares have also shrunk in value this year.

But the great news when that happens is that the dividend yield for those stocks heads up.

Lithium shares are not traditionally known for their massive income production, compared to miners for "old world" commodities like iron ore.

So you might be interested to know that there is now one stock that provides both a 7.6% dividend yield and exposure to lithium:

This lithium stock is in quite a dip 

IGO Ltd (ASX: IGO) shares have plummeted almost 38% over the past 12 months.

The last few weeks have been especially painful, recording a 41.25% tumble since mid-July.

That's why the yield has soared for those investors willing to bite the bullet now.

So the big question is, is it worth giving it a run in your portfolio?

Firstly, it's worth noting that, notwithstanding the recent underperformance, IGO shares are still more than 124% higher than they were five years ago.

Secondly, The Motley Fool's Tristan Harrison pointed out last month that lithium is not its only game.

"IGO owns and operates the Nova nickel-copper-cobalt operation, the Forrestania nickel operation and the Cosmos nickel operation – all of these are in Western Australia," he reported.

"Its goal is to discover, develop and deliver products that are critical for clean energy. It is committed to 'investing in exploration to ensure the world has a sustainable supply of clean energy metals.'"

So the business goal is aligned with where the world is generally heading in the long run.

Thirdly, many experts are tipping that lithium prices will soar once again after this low part of the economic cycle passes.

This view is reflected in how nine out of 15 analysts currently surveyed on CMC Markets rate IGO shares as a buy.

What about the downsides?

Aside from the share price fall, the dividend yield has been boosted by a special cash payout this year of 16 cents. Of course, there is no guarantee this will happen in future years.

And as with other junior miners, volatility will always rule the IGO share price. 

But if you're willing to put up with that in return for potential long-term gains, this current dip could be a buying opportunity.

Motley Fool contributor Tony Yoo 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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