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As coal is our 2nd largest export, I was thinking of investing in Whitehaven now that it’s price has been bashed up in this pandemic. It pays a really good dividend. Do you believe the price will recover & the dividend stay?
A: There is an old investment adage that says: “don’t buy a resources company for dividends”. I think Whitehaven Coal is a good example: its forecast dividend (from the analysts) for FY 20 is 4c, down from 40c in FY19, and 5.7c for FY21. This puts it on a pretty unremarkable prospective yield of 2.2% for FY20 and 3.1% for FY21.
Whitehaven Coal is struggling because:
Further, the whole ESG movement eliminates WHC from an increasing number of investors’ radars.
The analysts, like it however, Target price $2.55, vs current price of $1.83, upside potential of about 39%. 4 buys, 2 neutrals, 1 sell recommendation.
