Post by
GUNSS on Jan 29, 2023 3:08pm
Alliance Resource Partners $ARLP
Alliance Resource Partners $ARLP is a Master Limited Partnership (MLP) that's heavily focused on thermal (energy) coal used to generate electricity and also coking (metallugrical) coal used in steelmaking. I estimate that 80%+ of the Company's business is coal and the remainging amount Oil & Gas.
On Friday after the market closed, the Company announced a large (+40%) increase in its quarterly distribution payout to $0.70/unit or $2.80 (annual). That's a distribution yield of 13.52% on the closing price of Friday. However, the price will likely open at something like $24 on Monday morning, which would still be a yield of 11.67%.
As 2023 unfolds, I think the yields of high-yielding MLPs, REITS, etc. will decline along with interest rates. If true, a yield of say 9% or 8%on 12/31/23 might be quite appealing for safe companies like Alliance Resource Partners $ARLP. That implies a unit price of or $31.11 or $35 vs. the unit price on Monday Jan. 30th of say $24. The total return from $24 to $31.11 would be ~39% (incl. the $2.8/unit distribution).
A 39% total return in 2023 could prove to be very attractive as many market sectors could be down or have modest gains. I'm not saying 39% is a sure thing, but $ARLP is worth a closer look at current levels in the low-to-mid $20s...