A 36% yield from this ASX dividend share? Here's how these forward-looking investors made it happen

Some savvy passive income investors are earning a 36% yield from this ASX dividend star.

| More on:
Woman holding $50 notes and smiling.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Not everyone is earning a fully franked 36% yield from this ASX dividend share.

But some forward-looking passive income investors certainly are.

The company in question is ASX coal stock Yancoal Australia Ltd (ASX: YAL).

Yancoal stock closed up 2.3% yesterday, ending the day trading for $5.37 a share.

On the passive income front, the headline-making dividends the ASX coal share paid in 2022 and the first half of 2023 have come back to earth. That's come alongside the big retrace from the record coal prices during that period.

For its full year 2023 results, Yancoal reported a 39% year on year decrease in its realised coal price to AU$232 per tonne. Despite a 14% annual increase in attributable saleable coal production, this saw revenue slide to $7.8 billion from $10.5 billion in 2022.

Still, the ASX dividend share ended 2023 with an enviable cash balance of $1.4 billion.

And the Yancoal board declared a $429 million, 32.5 cent per share, fully franked final dividend. Eligible passive income investors can expect to see that land in their bank accounts on 30 April.

Atop the interim dividend of 37 cents per share, paid on 20 September, that equates to a full-year payout of 69.5 cents per share.

Meaning Yancoal trades on a fully franked yield of 13.0%.

Very tidy.

Yet these forward-looking investors are earning far more from this ASX dividend share.

Here's how.

Mining a 36% yield from this ASX dividend share

In the wake of the COVID pandemic, with travel and industry across the world widely shuttered, energy prices plunged.

By September 2020 this drove thermal coal prices below US$55 per tonne. That's compared to around US$130 per tonne today and down from highs of some US$440 per tonne in September 2022.

Alongside the plunging coal price, this ASX dividend share saw its stock heavily sold off as fear gripped the markets.

Shortly before things began to turn around, on 6 November 2020, the Yancoal share price closed at $1.92.

Many investors still steered clear, fearing it could be 'a falling knife'. But some forward-looking passive income investors took the plunge and bought Yancoal shares at what turned out to be a bargain basement price.

Over the past years, those investors will have earned the same dividends from those shares as investors who bought at far higher prices.

As for the past 12 months, at $1.92 per share, that equates to a fully franked yield of 36.2%!

Now, whether you're looking at buying Yancoal or any other ASX dividend share, be sure to do your own detailed research first. If you're short on time or don't feel comfortable with that, just reach out for some expert advice.

Motley Fool contributor Bernd Struben 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.

More on Dividend Investing

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

Forget term deposits and buy these ASX dividend shares

Analysts see better returns on offer with these dividend shares compared to term deposits.

Read more »

Woman calculating dividends on calculator and working on a laptop.
Dividend Investing

Brokers say these ASX 200 dividend stocks are buys

These stocks have been named as buys by brokers. Here's what they are expecting from them.

Read more »

Happy man in a holiday shirt holding out Australian dollar notes, symbolising dividends.
Dividend Investing

These are my top high-yield ASX dividend share buys right now

I like these stocks which have big yields with the potential for a lot more growth.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Buy Coles and this ASX 300 dividend share

Analysts are saying good things about these dividend stocks.

Read more »

Person handing out $50 notes, symbolising ex-dividend date.
Dividend Investing

Analysts say these excellent ASX income shares are buys

Here's what analysts are saying about these stocks.

Read more »

A man in suit and tie is smug about his suitcase bursting with cash.
Dividend Investing

Buy Westpac and this ASX dividend giant

Analysts think these giants are in the buy zone for income investors.

Read more »

Man holding a calculator with Australian dollar notes, symbolising dividends.
Bank Shares

Here's the ANZ dividend forecast through to 2026

Will the banking giant continue to pay big dividends?

Read more »

Woman laying with $100 notes around her, symbolising dividends.
Dividend Investing

3 fantastic high-yield ASX dividend shares to buy next week

Analysts expect big yields from these dividend shares.

Read more »