New Hope Corporation Ltd (ASX: NHC) shares have provided investors with some big dividends recently.
For example, over the last 12 months, the coal miner has paid out dividends per share of 96 cents.
Based on the current New Hope share price of $5.94, this equates to a whopping 16% trailing dividend yield.
To put that into context, a $10,000 investment in its shares would have yielded $1,600 in dividends.
But when something looks too good to be true, it often is. Is that the case with New Hope shares? Is it actually a dividend trap?
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Are New Hope shares a trap?
Unfortunately, if analysts at Goldman Sachs are on the money with their forecasts, investors could be looking at major dividend cuts from New Hope in the near term.
For example, its analysts are expecting a 23 cents per share final dividend from the coal miner when it releases its FY 2023 results in the coming weeks. This is down 59% on the 56 cents per share final dividend New Hope paid out last year and will bring its full-year dividend to 63 cents per share.
But the cuts won't stop there according to Goldman.
More cuts ahead
The broker has pencilled in a 33 cents per share dividend for FY 2024, which implies a 58% cut on its estimate for the current financial year.
Based on where New Hope shares are currently trading, this will mean a fully franked 5.5% dividend yield. And while this is still very attractive, it pales in comparison to its trailing dividend yield.
In addition, it is worth highlighting that Goldman Sachs has a sell rating and a $3.30 price target on New Hope's shares. This suggests that its shares could fall approximately 45% from current levels.
All in all, it's fair to say that this coal miner currently has the hallmarks of being a dividend trap.
