When the coal is shining brighter than gold

South African giant Exxaro Resources (JSE: EXX) isn't just an investment idea; it's a virtually guaranteed high dividend yield. It's a near-perfect investment portfolio asset, not without risks, but boasting an edge over many other contenders. Today, we'll discuss Exxaro Resources, a mining company that, while not producing diamonds or gold, boasts enviable returns compared to many of its peers. What's the company's secret, and is investing in Exxaro Resources a good idea today? Let's find out right now.

All the Pros and Cons of Exxaro Resources on the Stock Market

Exxaro Resources was founded and listed on the stock exchange in 2006 and will soon celebrate its 20th anniversary. During this period, the company has become the largest coal exporter, and could have exported even more if not for infrastructure limitations and poor logistics services. Over 20 years, the company experienced ups and downs due to fluctuating demand and the price of its core commodity, coal. At the same time, it's worth noting that during this period, no crises were threatening the company's financial stability: low production profitability allowed it to weather difficult times as much as possible. This is evidenced by stable, uninterrupted dividend payments - approximately twice a year, with a yield of up to 9.4% per annum.

Compared to its direct competitors, the company is the best option.

Exxaro Resources vs competitors by dividend revenue, P/E, Cassh flow, risks

Among the company's challenges, it's worth noting the negative global trend toward the fight against fossil fuels and the closure of coal-fired power plants. This could reduce demand for coal in the long term, forcing the company to devote resources to decarbonization.

The company's shares, which are certainly tied to coal prices, external factors, and geopolitics, but not as strongly as oil refining or gold mining businesses, tested their highs in 2026 amid the energy crisis in Europe and sanctions against competitors from Russia. It's worth noting that recent geopolitical conflicts, when they escalate, have a positive impact on coal prices. So, this isn't a risk, but an opportunity for the company to increase net profit.

Technical Analysis

The chart shows an uptrend. June saw a retreat from the highs and a strong price correction. However, this week, an upward momentum emerged amid the escalating military conflict between Iran and the US. While the stock market overall is down, the company is actually up, which is an excellent diversification opportunity.

Exxaro Resources price chart July 2026

The RSI on the weekly timeframe is neutral (around 52), indicating the absence of critical overbought conditions and remaining room for medium-term growth. However, technical analysis indicators are still showing sell signals, and signs of a downward trend reversal are still present, but this only occurs during a strong correction.

Exxaro Resources - Fundamental Valuation

Its market capitalization (~R68 billion) is almost a quarter covered by net cash on its balance sheet. The company is capable of generating high profits even with logistical constraints, thanks to its domestic market. The acquisition of manganese assets in early 2026 confirms that management is not simply burning through coal cash but is implementing a transformation strategy. A P/E multiple of 6.3x makes the acquisition safe from a downside risk perspective. Exxaro is a Value Stock.

SWOT Analysis of Investments in Exxaro

The main dilemma for investors here is balancing high current returns with the risks of long-term holding. By purchasing EXX shares, investors acquire a stable dividend stream, protected by a huge cash reserve. However, this return comes at the cost of high price volatility due to the commodity cycle and South Africa's infrastructure constraints, which constrain the company's market capitalization.

SWOT picture of investments in Exxaro Resources (EXX), July 2026

Based on the analysis, we can conclude that some of the infrastructure-related threats could be mitigated. Given the company's financial resources, Exxaro could invest in infrastructure, railway repairs, and even establish its own logistics company, especially after the state allowed private carriers to operate the railway.

As for cooperation with Eskom, a company with a less-than-stellar reputation, this risk remains, but it is manageable. Unlike Stefanutti Stocks (JSE: SSK), which was virtually destroyed by Eskom's debts, coal supplies are more controllable, but potential payment delays could create many problems.

Verdict

Investing in Exxaro is a bet on a double-digit dividend yield protected by a huge cash cushion, with a free option to gradually improve logistics in South Africa and diversify into the manganese sector. It makes a lot of sense, and it's an idea that can be pursued immediately when the stock price has retreated from its highs, is not considered overbought, and has a good outlook. It's also an excellent asset for risk diversification if you've previously invested in assets vulnerable to rising energy prices.