by Ian Cooper

Coal stocks are starting to attract substantial attention thanks to the Trump administration that strongly support the U.S. coal industry.

Most recently, President Trump signed an executive order directing Defense Secretary Pete Hegseth to enter into long-term contracts with coal-fired power plants across the country. The goal is to ensure that the U.S. military receive reliable electricity from domestic coal sources.

According to The New York Times, the order “directs Defense Secretary Pete Hegseth to enter into long-term contracts with coal plants across the country to power military installations. The move could provide financial support to dozens of coal plants that might have otherwise been set to retire in the coming years.”

In addition to securing power purchases, President Trump also instructed the Department of Energy to allocate funding aimed at keeping coal plants operational in key states, including West Virginia, Ohio, North Carolina, and Kentucky. These regions are home to many coal-producing companies and related infrastructure, meaning the funding could have a direct and positive impact on industry revenues.

So, what’s the best way to trade the news?

Option 1: Buy Individual Coal Stocks

One way to trade this theme is by purchasing shares of individual coal companies that stand to benefit from increased government support and potentially higher demand.

Two examples include Peabody Energy (BTU),which is one of the largest coal producers in the world, with operations spanning multiple regions and coal types. Another is Hallador Energy (HNRG), a coal producer with operations primarily in the Midwest.

Option 2: Gain Broader Exposure with a Coal ETF

For investors who prefer diversification, an exchange-traded fund may be a better choice. One popular option is the Range Global Coal ETF (COAL).

The COAL ETF has an expense ratio of 0.85% and is designed to track the performance of companies involved in both metallurgical and thermal coal. This includes firms engaged in coal production, exploration and development, transportation and logistics, and distribution.

Rather than relying on the performance of just one company, the ETF spreads exposure across multiple coal-related stocks, such as Warrior Met Coal, Alpha Metallurgical Resources, Peabody Energy, Glencore PLC, BHP Group, and Hallador Energy.

In addition to price appreciation, COAL also offers income.

The ETF pays an annual dividend and most recently distributed just over $0.59 per share on December 31. Before that, it paid approximately $0.37 per share on December 31, 2024. While dividend amounts can vary from year to year, this added income stream may appeal to investors looking for both growth and yield.

In short, whether through individual coal stocks like BTU and HNRG or through broader exposure with the COAL ETF, there are multiple ways to participate in this potential upside to the Trump-fueled coal story.