Is a 9.7% annual dividend from a coal company a gift or a trap?
Coal was supposed to be dead, and yet this company pays four times more than the big banks. The CEO cut his own pay last year and this year set a test for whether to raise it. The verdict comes in three weeks - and for a European investor it has one extra catch.
Key points
An Oklahoma coal company pays four times more than JPMorgan, and the market still sent it down a tenth over the past year
The CEO set himself a specific number at which he would raise the payout, and last year he cut it
A payout ratio of 116% looks like a warning on screeners, but it actually measures the company with the wrong metric entirely
At the end of October, one press release will decide between a yield over 11% and another cut
For a European investor, that 9.7% has a catch that leads many brokers to not even allow the purchase
A coal company that the market had left for dead pays more than most banks
Alliance Resource Partners $ARLP is an unassuming fuel supplier from Tulsa, Oklahoma: the second-largest coal producer in the eastern US, selling mainly to power plants in states around Ohio and Pennsylvania. But legally it is not a classic stock. It is a master limited partnership (MLP), so you don't buy shares, you buy units, and instead of a dividend you receive a "distribution." Four times a year, though, cash still arrives.
And there is a lot of it. At a price around $24.8 and a quarterly payout of $0.60, the annual yield works out to 9.7%. For comparison: large US banks like JPMorgan or Bank of America pay 2 to 3 percent. The company's market value is only $3.2 billion, and the unit price has dropped roughly a tenth over the past year - while operating results have improved.
So why does the average investor pass it by? Three reasons:
The coal label. For most European portfolios, this is a sector that is not analyzed, but simply struck out.
Last year's payout cut. In July 2025, the quarterly distribution fell from $0.70 to $0.60. Dividend investors have long memories.
The complex structure. An MLP means different taxes, different financial statements, and for many European brokers even a trading ban.
Together they create a blind spot hiding a more interesting story than the word "coal" suggests.