Coal miner Alliance Resource Partners (NASDAQ:ARLP) reported record operating and financial results setting new highs in several categories. Coal sales volumes led the way with revenue hitting $2.0 billion, an increase of 10.3% over 2011. The company also increased its quarterly distribution to unit holders by 2.1% enabling its general partner, Alliance Holdings (NASDAQ:AHGP), to raise its distribution by 2.8%. 

The company expects more of the same in 2013 as it anticipates posting another record year. It sees both coal sales and production volumes increasing year over year. Alliance expects to see a benefit from a full year of production at its Onron mine as well as the continued ramp-up of longwall production at its Tunnel Ridge mine. Those volume increases, when combined with its contracted sales portfolio, gives the company excellent visibility into the year ahead.

Alliance also plans to invest between $370 million and $400 million on capital projects over the next year. For some perspective, larger coal mining peer CONSOL Energy (NYSE:CNX) only expects to spend between $410 million and $520 million on coal capex in the year ahead. CONSOL is instead investing heavily in natural gas development; looking to 2014, it doesn't expect to invest in any new major coal growth projects. Alliance, on the other hand, is investing to grow its production which it hasn't had a problem contracting out.

As a master limited partnership, Alliance operates a highly contracted business in order to ensure that its cash flows are stable so that it can fund its distribution to investors. The company has already contracted 38.5 million tons of its expected 2013 production which is expected to range between 38.1 million and 39.1 million tons. Looking even further ahead, the company only has 2.9 million tons of production in 2014 and 2015 that remain open to market pricing. This gives Alliance excellent visibility to continue to grow its distribution.

Given the current weakness in the North American coal market, especially in Appalachia, having secured its volumes is an important step. Investors looking at a contrarian bet on coal could do well with an investment in Alliance Resource Partners, with its nearly 7% yield, or in its general partner, Alliance Holdings, and its faster-growing, nearly 6% distribution.

However, because of the highly contracted nature of its business, investors shouldn't expect much in the way of capital gains. The coal miner best positioned for growth seems to be Peabody Energy (NYSE:BTU). Not only does the company have a strong position in both the Powder River and Illinois Basins, but it's Australian operations position the company to strategically to benefit from strong demand for coal from both China and India.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Alliance Resource Partners, L.P. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.