ASX 200 mining stock down 20% with 8% yield: is it a buy?

This ASX share could reward investors generously, and not just in dividends.

| More on:

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

Key points
  • The ASX 200 mining stock has seen its share price decline by 20% in 2025, mainly due to falling global coal prices. 
  • Despite the recent tumble, New Hope offers a substantial dividend yield of 8.5%, which may appeal to income-focused investors looking beyond immediate share price movements.
  • Analysts have mixed views on New Hope due to uncertain coal prices and production levels. The consensus price target is $4.10, a modest 2.7% upside from current levels. 

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?

Coal miner in the tunnels pushing a cart with tools.

Image source: Getty Images

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.

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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

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

2 buy-rated ASX dividend shares to buy for 4% to 5% yields

Let's see which shares are being recommended as buys this week.

Read more »

Excited couple celebrating success while looking at smartphone.
Dividend Investing

Here's a 9% ASX dividend stock to consider for a monthly passive income

This ASX dividend stock is every investor's dream.

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Technology Shares

This ASX tech stock just raised its dividend by 21%

This stock is raising its dividends like clockwork.

Read more »

A wad of $100 bills of Australian currency lies stashed in a bird's nest.
Dividend Investing

2 top ASX 200 dividend stocks to help boost your superannuation income

The passive income from ASX dividend stocks can help pave the way for a wealthier retirement.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Dividend Investing

This ASX dividend stock has a 4% yield and a 27% growth rate

This dividend stock is a rare gem.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

2 ASX shares with dividend yields above 8%

These stocks have very appealing yields!

Read more »

Australian dollar notes in a nest, symbolising a nest egg.
Dividend Investing

3 ASX stocks expected to increase their dividends in 2026

Three blue-chip ASX companies are all forecast to lift their dividends in FY 2026.

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Dividend Investing

3 ASX 200 dividend stocks with yields over 4% today

Big yields are still out there.

Read more »