Peabody Energy, the biggest US coal miner, will probably start paying dividends next year after using growing cash holdings to pay off debt, according to Lucas Pipes, an analyst with B Riley Securities.

Some of Peabody’s debt covenants include restrictions on returning capital to shareholders but the company has plans to retire all senior secured debt within a year. The only liabilities expected to remain would be convertible notes issued in 2020, CFO Mark Spurbeck said during an earnings call.

Earnings for Peabody and other coal suppliers have climbed this year amid a global energy crunch that’s driving up demand and prices for fossil fuels. The company had $1.35 billion in cash at the end of the quarter, more than double the year-earlier figure. US rivals including Arch Resources Inc. and Alpha Metallurgical Resources Inc. have announced hefty special dividends this quarter, a move that makes their shares more attractive to investors.

“For Peabody to compete in capital markets, they need to give money back to shareholders,” Pipes said in an interview Monday, and it’s “extremely likely” that the company will do so next year.

Despite the company’s growing cash pile, rewarding shareholders or pursuing organic growth would be a better strategy than acquisitions, said Pipes.

He’s also skeptical about using stock to fund any transactions. Even though Peabody shares have almost tripled in value this year, Pipes sees potential for more upside. That means any deal funded with equity would be using shares that haven’t attained full value.

Pipes has a $31 price target for the company. Peabody gained 11% to $29.93 at 3:34 p.m. In New York.

Peabody had been in talks with Australia-based Coronado Global Resources Inc. but the companies said Monday that merger talks had terminated.

That leaves Peabody to focus on its balance sheet.

“With cash generated, we continue to strengthen our balance sheet by advancing our debt-reduction strategy,” CEO Jim Grech said during a November 3 conference call with analysts.