The S&P/ASX 200 Index (ASX: XJO) share Whitehaven Coal Ltd (ASX: WHC) could be one of the biggest dividend payers over the next year and a half.
The ASX coal share is benefiting enormously from the much higher coal prices following the Russian invasion of Ukraine. Countries have been looking for alternative sources of energy away from Russia.
While coal prices may not stay this high forever, the miners involved are reaping the benefits of the current environment.
This high level of profit is helping Whitehaven pay big shareholder payouts. Let's have a look at the dividend projections for the next couple of years.
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Estimated dividends
The last two dividends from Whitehaven amount to 72 cents per share, fully franked. This means the trailing grossed-up dividend yield is 15.3%.
Commsec numbers suggest that the ASX 200 coal share could pay an annual dividend per share of 65 cents in the 2023 financial year. That would be a grossed-up dividend yield of 13.8%.
Then we get to the estimated dividend for FY24. Whitehaven is expected to pay a dividend of 53 cents per share, which translates into a grossed-up dividend yield of 11.25%.
But, these are just the current estimates for the ASX 200 share. Projections can change – dividends are not guaranteed.
Will FY23 be another strong year?
Yesterday, the ASX coal share announced that its managed run-of-mine production is 4.3 million tonnes for the three months to 31 March 2023, which was below plan. The miner said that labour shortages are being felt across the business, with several additional operational constraints at Maules Creek.
The quarter for the three months to 30 June 2023 is expected to deliver an uplift in volumes overall, but lower than expected from Maules Creek in the second half for the ASX 200 share.
Managed ROM coal production for FY23 is now expected to be between 18 million tonnes to 19.2 million tonnes, while the guidance for unit cost per tonne of coal guidance increased by around $5 per tonne to a range of $100 per tonne to $107 per tonne.
Despite that, Whitehaven was able to make $1.2 billion of operating cash flow during the quarter and finish with net cash of $2.7 billion.
However, the weaker production could result in lower-than-expected sales in the next financial year.
