Coal producer Thungela Resources (TGA) is on a 2022 dividend yield of more than 40%, based on forecasts from Liberum. It is expected to pay above-average dividends for at least two more years.

The scramble for energy as the world emerged from the pandemic and Russia invaded Ukraine has seen thermal coal prices soar and Thungela’s shares gain nearly 10-fold on the 150p price at which they started trading after its demerger from Anglo American (AAL) last June.

Liberum forecasts 642.2p per share in dividends for 2022 versus 93.1p in 2021. That means it could pay out more than four times the initial cost of the shares in dividends this year alone.

For 2023 the investment bank forecasts Thungela will pay out 357.8p which implies a 23.8% yield based on the current £15.06 share price; and 188p for 2024 which equates to a 12.5% yield.

It is possible the dividend could come in lower than Liberum’s expectations if Thungela decided to do an acquisition, thermal coal prices crash, or the production problems linked to the poor performance of South Africa’s state-owned rail operator Transnet continue.

In the long term, prospective investors would need to weigh the ethical dilemmas and potential risks of being exposed to a polluting fuel like coal as the world looks to move to net zero and the evidence of the impact of climate change continues to mount.

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