This year has been rough on this ASX 200 mining stock. New Hope Corporation Ltd (ASX: NHC) shares are down significantly in 2025, falling 20% for the year to date.
The sliding share price is reflecting a steep decrease in global coal prices. Yet the coal mining company still delivers a relatively high dividend yield of 8.5% at current levels.
For income-focused investors, that might look tempting. But is it really time to buy this ASX 200 mining stock?
Diversifying coal-market risk
New Hope is one of Australia's established coal miners. Its operations include major assets such as the Bengalla Mine in New South Wales and the New Acland Mine in Queensland.
In FY2025, higher output from the mines, especially New Acland, boosted saleable coal production to 10.7 Mt.
New Hope also increased its equity in Malabar Resources to about 23%, increasing its exposure to metallurgical coal and diversifying its coal-market risk. The company highlights that it maintains key strengths: low-cost operations, coal type diversification, and disciplined management despite weak prices.
Market beating dividends
Shares in the coal stock closed last week at $3.99, a gain of 2.8%. The ASX 200 mining stock is down 8% this month and 19% over a year, but still up 171% over five years.
However, New Hope has continued to reward passive income investors with some market beating dividends.
Shareholders received a fully franked 19 cent interim dividend on 9 April, and a final fully franked 15 cent dividend from New Hope on 8 October. The total annual dividend is 34 cents per share, giving New Hope stock a fully franked 8.5% trailing yield that partially offsets last year's capital losses.
The company also introduced a Dividend Reinvestment Plan (DRP), letting eligible shareholders reinvest dividends as new shares.
Management has stated dividends will continue as the main form of shareholder return, supported by strong franking credits.
What do the experts think?
New Hope's weak share price and high yield may appeal to income investors who accept commodity risk. Returns depend highly on unpredictable coal market conditions. If coal prices rebound, the coal miner could deliver strong investor returns.
Brokers are divided. Only a few analysts rate the ASX 200 mining stock a buy and set a target price over $5.00. Most market watchers are more conservative with a hold recommendation and a target price for the next 12 months of $4.10, a modest upside of 2.7%.
Analysts at Macquarie Group (ASX: MQG) have become cautious, downgrading New Hope to 'underperform' and cutting their 12-month price target to $3.80 per share. They are citing weaker coal-price outlook and subdued production expectations as the reason for the downgrade.
