Updated 7/17/2025
NACCO Industries (NYSE: NC) delivers contract-based surface mining services, with a focus on lignite coal, while also earning income from mineral royalties and land reclamation. With a market cap of around $288 million and a share price hovering near $40, the company has steadily grown revenue and earnings while maintaining strong capital discipline and a conservative payout approach.
Led by CEO J.C. Butler, NACCO has prioritized long-term projects, stable cash flows, and shareholder alignment. The company offers a forward dividend yield of 2.28% with a payout ratio under 20%, backed by a balance sheet that supports both reinvestment and returns to shareholders.
Recent Events
NACCO posted a 23% jump in revenue year-over-year last quarter, which is a big move for a company like this. That kind of growth typically points to better performance from its royalty-driven Minerals Management business or rising commodity-linked revenues. What’s encouraging is that this increase wasn’t just a one-time blip—earnings were also up 7.2%, showing some operating momentum.
Financially, NACCO remains on solid footing. It’s sitting on nearly $62 million in cash, while total debt stands at about $104 million. That might seem like a lot at first glance, but the company’s current ratio of 3.42 shows it can easily meet short-term obligations. The debt-to-equity ratio is a modest 25.5%, reinforcing that this is a company that doesn’t take on risk lightly.
That said, not everything is picture perfect. The business generated $37 million in operating cash flow over the past 12 months but posted negative levered free cash flow of -$43 million. That suggests some heavy investment—possibly in future royalty streams or mining infrastructure. While it’s something to keep an eye on, there’s nothing here indicating strain on the company’s ability to maintain its dividend.
Key Dividend Metrics
📈 Forward Dividend Yield: 2.28%
💸 Forward Dividend Rate: $1.01 per share
📊 Trailing Dividend Yield: 2.30%
⏳ 5-Year Average Yield: 2.64%
🔁 Payout Ratio: 19.65%
📆 Most Recent Dividend Date: June 16, 2025
❌ Ex-Dividend Date: May 30, 2025
Dividend Overview
NACCO’s dividend yield is holding steady around 2.3%, which is right in line with where it’s averaged over the past five years. That’s not the kind of yield that’s going to draw in every income investor at first glance, but when you look at how conservative the company is with its payout ratio—under 20%—the stability begins to shine through.
The company clearly views the dividend as a core part of its shareholder value strategy. It isn’t stretching to offer an artificially high yield, nor is it hoarding cash unnecessarily. That balance between payout and retention is a good sign, especially in a business where capital expenditures can fluctuate year to year.
What’s more, NACCO’s long-term contracts and royalty streams offer a smoother earnings base than many would expect in the mining space. That’s helped the company maintain a consistent dividend, even through tougher industry cycles.
Dividend Growth and Safety
On the growth side, NACCO isn’t going to top dividend aristocrat lists anytime soon, but the trajectory has been healthy. The most recent increase took the annual dividend from $0.91 to $1.01—a solid 11% bump. That kind of raise isn’t common among smaller industrial firms, and it reflects confidence from the board.
Safety-wise, there’s plenty of breathing room. The company earned $34 million in net income last year. With only around 5.88 million shares outstanding, it’s spending roughly $6 million annually on dividends. That’s less than 20% of earnings, and it doesn’t take into account the significant cash reserves on hand.
Ownership also tells a story. Insiders hold over 32% of shares, while institutions own another 35%. That level of insider alignment typically means management is thinking about long-term shareholder returns, not just quarterly headlines. Companies with high insider ownership tend to be careful with capital and loyal to their dividend policies.
The negative free cash flow number might raise an eyebrow, but it’s more reflective of investment timing than operational stress. With strong operating cash flow and plenty of liquidity, the dividend doesn’t appear to be under any pressure.
For income investors looking beyond the usual suspects, NACCO offers a compelling mix: a reasonable yield, a cautious payout policy, and a steady stream of contract-based income. It’s not flashy—but sometimes, boring is beautiful when it comes to dividends.
Cash Flow Statement
NACCO Industries’ cash flow profile over the trailing twelve months shows a business in a heavy investment cycle. Operating cash flow came in at $37.1 million, a notable improvement from the previous year’s $22.3 million, but still well below peak levels in 2021. The uptick signals more consistent earnings from core operations. However, capital expenditures also jumped to $49 million, keeping free cash flow in negative territory at -$12 million. This suggests the company is prioritizing long-term asset investment over short-term liquidity.
On the financing side, NACCO raised $53.4 million in new debt and repaid nearly $9.8 million, while also spending $6.4 million on share repurchases. The overall cash balance dropped from $72.8 million to $61.9 million, a manageable drawdown considering the company’s $104 million in total debt. The increase in financing activity likely helped offset aggressive investing outflows. Though cash flow is currently under pressure, the long-term investment approach and solid operating income provide stability.
Analyst Ratings
Recent analyst coverage on NACCO Industries (NC) remains minimal, with just one analyst currently weighing in on the stock. That single analyst has placed a 💪 strong buy rating on NC, accompanied by a consensus price target of 🎯 $38.79. This target is slightly below where shares are currently trading, indicating a stable outlook with limited near-term upside expected.
The reason behind this optimistic stance appears tied to NACCO’s overall financial consistency and its defensive, contract-based revenue model. Even with low trading volume and limited Wall Street buzz, the company’s operational clarity seems to inspire confidence in the lone analyst covering the name. What stands out is the tight spread between the high, low, and average price targets—each marked at exactly $38.79. That sort of uniformity reflects strong conviction and minimal disagreement, signaling that the stock’s valuation is seen as fair and grounded.
The 🔍 strong buy rating isn’t built on the promise of explosive growth, but rather a recognition of NACCO’s disciplined execution, reliable income streams, and shareholder-friendly policies. While the company may not attract a lot of analyst attention, the singular coverage it does receive leans toward the belief that it’s a steady and well-managed business worth keeping an eye on.
Earning Report Summary
Solid Start to the Year
NACCO Industries kicked off the year with a stronger-than-expected quarter. The company reported $7.7 million in operating profit, a nice step up from $4.8 million during the same time last year. A big part of that came from higher coal deliveries, especially out of Mississippi, where things had slowed down previously. The company’s mitigation business also chipped in with a meaningful lift, and minerals management saw better margins thanks to higher natural gas prices and more action around its Eiger investment.
Revenue was up nearly 24%, and net income came in at $4.9 million—about 7% higher than a year ago. That worked out to $0.66 per share, compared to $0.61 last time. EBITDA also saw a healthy jump, moving up 14% to $12.8 million. Not everything went NACCO’s way, though. They saw some pressure from weaker performance in North American Mining, and costs were up due to labor and outside services. Plus, interest expenses were a bit higher, and investment income dipped, which took a little shine off the bottom line.
Management’s Outlook and Direction
CEO J.C. Butler shared a pretty clear message: NACCO is sticking to its long-term, steady game plan. He pointed out that demand across coal and contract mining remains solid, and there’s growing support for fossil fuel infrastructure, which could play in NACCO’s favor. He also hinted that some new projects are expected to contribute meaningfully to earnings by 2025, which gives investors something to look forward to on the horizon.
Butler also reinforced the company’s commitment to shareholder returns. Between steady dividends and a continued share repurchase program, there’s no doubt that rewarding long-term holders remains a priority. While not flashy, NACCO’s results show a company moving forward with intention—managing costs, building future earnings, and keeping capital returns front and center.
Management Team
NACCO Industries is led by a management team that values consistency, operational discipline, and long-term thinking. At the top is CEO J.C. Butler, whose approach has always leaned toward steady execution rather than attention-grabbing moves. His commentary from the latest earnings release reflected that style—highlighting stable demand in key segments and reaffirming the company’s commitment to measured growth.
Butler is supported by a finance team that has kept the company on a solid financial footing. The conservative balance sheet is no accident; it reflects a deliberate strategy to avoid overextension and stay flexible, especially in a capital-heavy business like mining. That financial discipline pairs well with the operational side, where the leaders of NACCO’s mining and minerals divisions have shown an ability to manage through industry cycles.
One of the most reassuring aspects for investors is the insider ownership. More than 30 percent of shares are held by insiders, which aligns management’s interests with shareholders. Their steady use of share buybacks, along with a reliable dividend policy, underscores a consistent focus on delivering long-term value. It’s a team that favors clarity and consistency over short-term wins, and that tone is visible throughout the organization.
Valuation and Stock Performance
NACCO shares are currently trading around $40, giving the company a market cap of about $288 million. From a valuation standpoint, the stock is modestly priced, with a trailing P/E ratio of 8.4 and a price-to-book ratio of just 0.7. That kind of discount suggests investors remain cautious, likely because of the company’s ties to coal and mining—a sector that’s facing long-term structural shifts.
Still, the numbers tell a different story. Year-to-date, the stock has returned over 20 percent, keeping pace with or slightly outperforming broader small-cap indices. Its low beta of 0.6 also signals that NACCO doesn’t move wildly with the market, which might appeal to investors seeking stability. Over the past few years, it’s shown an ability to hold its ground, even during times when other commodity-exposed companies were whipsawed by price swings.
The stock may not be flashy, but its valuation is rooted in real earnings, steady cash flow, and a proven dividend. When paired with a business model based on multi-year contracts and cost management, the result is a company that rewards patience. It may not attract growth-hungry investors, but for those focused on income and value, it’s quietly carving out a dependable role.
Risks and Considerations
While NACCO has many strengths, there are risks that shouldn’t be ignored. One of the more obvious is exposure to coal, a fuel source that continues to face pressure from environmental policy and changing energy demand. Even though NACCO specializes in lignite coal, which still has niche use in regional power generation, the long-term outlook for coal overall remains cloudy.
The company’s reliance on contract mining also presents timing risks. Many of these contracts are long-term, but when they roll off, the company must secure renewals or replace that business. If competition heats up or if customer budgets tighten, pricing power could suffer.
There’s also the capital intensity of the business. NACCO has been investing heavily, which is why free cash flow has been negative despite positive operating income. If capital expenditures continue at this pace without a proportional return, that could tighten the room the company has for dividends and share buybacks. Management has done a good job maintaining flexibility, but aggressive investment always carries risk.
Debt, while manageable now, could become a concern if interest rates rise significantly or if new borrowing is needed at less favorable terms. NACCO has traditionally used debt conservatively, but it still needs to balance funding needs with maintaining its credit standing.
Final Thoughts
NACCO Industries continues to stand out as a disciplined, income-focused company in a sector that doesn’t usually promise stability. The management team is aligned with shareholders, the valuation remains conservative, and the dividend policy reflects long-term thinking rather than short-term yield chasing.
There are risks, particularly tied to energy policy and contract timing, but the company’s structure helps absorb shocks. It has enough liquidity, steady operations, and a leadership group focused on careful capital allocation. That doesn’t make NACCO a growth story, but it does make it one of those rare small caps that rewards patience and consistency.
For dividend investors looking for stable cash flows, insider-aligned leadership, and exposure to infrastructure-type projects, NACCO offers a combination that’s increasingly rare. It may not get much attention in the broader market, but its steady pace and strong foundation give it a place in a well-rounded income portfolio.