Dividends and Unloved by industry and environmentalists, coal remains

If you ever read books around the times of Sherlock Holmes, the air was a character in the story because it was a mixture of fog and coal pollution. At the time of Mr. Holmes, the dominate way to heat the homes of London was coal so it was not surprising it made into the literature and songs – I received a lump of coal for Christmas. Coal replaced candles for heating and eventually making electricity which replaced coal, but coal has always had a negative aspect of pollution when it is used. One of the earlier solutions was to make the smokestacks higher so more it would be dispersed by the winds be blown away from the coal plant. Jumping to current days, coal is still on governments’ minds as seen at the recent COP27 or Conference of the Parties held in Egypt.

In an article by Eric Reguly, the issue of coal has been on the agenda for the past 27 years and likely will continue to be on the agenda. The good news is the 75 countries which represent 95% of the total coal consumption have pledged to reach net zero emissions by 2050 to 2060.

The bad news is the demand for coal will continue into the future as evidenced by the war in Ukraine delayed the closure of coal plants in Europe. China is building 100 new coal plants, as well as 100 new coal plants are being built in the rest of Asia. The reason why coal plants are being built is simple: they are relatively easy to build, coal is plentiful and equally important inexpensive, and the lifespan of a plant is 30 to 50 years. One of the reasons why coal is plentiful is companies such as Glencore have built an infrastructure system that allows it to make billions from coal mining and exports.

Linking to dividend paying stocks, similar to everyone you will have concerns as person. You want to live in a relatively clean environment and all that entails. When you are investing, you want to invest in profitable companies that can pay dividends for you to enjoy the environment. Energy companies meet demand and prices allow profits to be made, the companies may go in and out of national favorites but as an investor you concern is legally making money. When the laws change, you can change, as long as the government keeps the laws, so much the better. In the next few years, you can see how the alternatives are doing and when to change if change is needed.

There are more questions than answers, till the next time – to raising questions.

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