When most investors think of high-yield dividend stocks, they assume you're settling for slow growth in exchange for income. But every so often, a few companies break the mold—delivering monster free cash flow yields and a legitimate shot at doubling your money. Today, we’re going to talk about two such unicorns: companies with free cash flow (FCF) yields north of 26%, sustainable dividends, and beaten-down stock prices that look ready for a massive reversion to the mean.
So grab your cash-flow goggles and let’s dive into two overlooked gems that Wall Street might finally be ready to love again.
Stock #1: Alliance Resource Partners, L.P. (NASDAQ: ARLP)
Free Cash Flow Yield: 33%
Dividend Yield: 14.8%
Market Cap: ~$2.5 billion
Yes, it’s a coal company. No, this is not your grandfather’s coal stock.
Alliance Resource Partners (ARLP) is one of the last men standing in the U.S. coal sector. But here’s the twist: it's also one of the most profitable. While ESG investors and climate hawks have shunned coal entirely, ARLP has been quietly minting free cash flow and handing it back to investors in the form of eye-popping distributions.
In 2024 alone, ARLP is on pace to generate over $800 million in free cash flow, which is staggering when you consider its entire market cap is just around $2.5 billion. That puts its FCF yield over 30%, meaning the company could theoretically buy back a third of itself every year if it wanted to.
Instead, it’s paying out a massive 14.8% dividend yield, with ample room to grow it further. Unlike some high-yield traps, ARLP has low debt, rock-solid operations, and contracted cash flows from utilities who still rely on thermal coal for baseload power.
And here’s the kicker: coal prices have stabilized, not collapsed. That gives ARLP the breathing room to continue monetizing existing assets without investing in new ones. It’s a classic cash-cow scenario: milk the business for as long as demand holds up.
Why It Could Double
ARLP is ridiculously cheap. Its current price-to-earnings ratio is under 4. Its price-to-free cash flow is even lower. All it would take is a modest rerating to a P/FCF of 8 and this stock doubles without breaking a sweat.
If you assume even mild multiple expansion and reinvested dividends, total returns could explode over the next few years.
Will the coal story last forever? Probably not. But over the next 3-5 years, ARLP could deliver generational returns before ESG investors even know what hit them.
Stock #2: CVR Partners, L.P. (NYSE: UAN)
Free Cash Flow Yield: 26%
Dividend Yield: Variable (averaged over 20% in 2023)
Market Cap: ~$750 million
If you like the idea of a cash-spewing commodity business but want to avoid coal, CVR Partners (UAN) might be your jam.
UAN produces nitrogen fertilizer—a product that’s essential to feeding the world. As long as people need food, farmers need fertilizer. That creates a strong secular floor for demand, especially in an increasingly resource-constrained world.
But here’s the beautiful thing about UAN: the market has completely misunderstood this company.
Despite being a critical supplier in the ag value chain, UAN is trading like a distressed asset. Why? Because it's small, illiquid, and operates in a cyclical industry.
But that’s exactly why the opportunity exists. In 2023, UAN generated $200 million in free cash flow on a market cap of ~$750 million. Like ARLP, it could theoretically buy back over 25% of itself annually.
Instead, it pays that money out to shareholders in the form of enormous quarterly distributions. In good years, you’re looking at a dividend yield north of 20%. Even in leaner times, UAN remains solidly profitable, thanks to its efficient production model and lack of major expansion costs.
Why It Could Double
The fertilizer cycle is in one of its "down" phases, but commodity prices have already started to turn. As pricing power returns, so does UAN's ability to mint even more cash.
Add in the fact that global supply chains are still under stress and that natural gas (a key input) remains volatile, and the stage is set for another wave of elevated margins. UAN doesn’t need a fertilizer boom to double; it just needs the market to stop treating it like it’s going out of business.
If the company maintains a 26% FCF yield and the market simply re-rates it to a 13% yield, that's a clean double. Toss in juicy distributions along the way and you could be looking at a 2-3x return over 3-4 years.
Risk Factors to Consider
Let’s not kid ourselves: these are not sleep-well-at-night blue chips. Both companies operate in cyclical, politically sensitive industries. Regulatory shifts, price shocks, or recessionary downturns could hurt cash flows temporarily.
Also, both ARLP and UAN are master limited partnerships (MLPs), which means investors get K-1 tax forms and need to consider tax implications. If you're investing through an IRA, be aware of UBTI (unrelated business taxable income).
But for taxable accounts, these names can be insanely lucrative.
The Bottom Line
In a world where the S&P 500 trades at over 20x earnings and the average dividend yield is under 2%, finding stocks with 26%+ free cash flow yields and massive distributions is like discovering treasure in plain sight.
Alliance Resource Partners and CVR Partners aren’t glamorous. They won’t get you invited to Davos. But they generate more real cash per dollar of market cap than almost any company on the planet.
If free cash flow is the lifeblood of investing, then these companies are pumping it like a firehose. All they need is a slight change in investor sentiment or commodity prices to double—or more.
You don’t need a dozen stocks like this. Just one or two well-timed plays can change your entire portfolio trajectory. These two might just be your ticket to doing exactly that.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research or consult a financial advisor before making investment decisions.
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