As the United States debt escalates upward, inching ever closer to 100 percent of the country's GDP, we are continuing to see some fairly unstable markets - both state side and abroad. Due to this, over the past few years, we've seen an enormous run-up in the price of gold - and it is likely to continue for some time.
In this article, I analyze five great opportunities for income seeking investors in precious metals stocks - primarily those that are involved in gold. These companies all have strong market positions along with positive earnings outlooks and good dividend payout ratios. I will explain why these companies should be considered for anyone who is taking a good look at the precious metals sector to either add to or diversify their overall portfolio.
Freeport-McMoRan Copper and Gold, Inc. (NYSE:FCX) is involved in the mining, exploration and production of mineral resources, with a particular focus on gold, silver, copper, cobalt, and molybdenum. Recently the company renegotiated its contract with the Indonesian government, allowing Freeport-McMoRan to run Grasberg - the worlds second largest copper mine.
Although the company has not as of yet announced its next dividend payout, over the past year, it has been offering investors $.25 per share on a quarterly basis. And, with the share price currently just under $44, it is down from its nearly $59 yearly high. But even though the share price is off, this stock could be a good buy - primarily if it continues paying at its current dividend rate and yielding investors over 3 percent.
In fact, recent rumor has it that the world's most celebrated investor, Warren Buffett, may even be considering purchasing shares of Freeport-McMoRan. Based on the company's consistent earnings power, along with its good return on equity - and little to no debt - I recommend buying this stock.
Agnico-Eagle Mines Ltd. (NYSE:AEM), in conjunction with its subsidies, Agnico-Eagle focuses on the development, exploration and production of mineral properties. It primarily seeks out gold, silver, copper, lead and zinc in its operations. This particular stock has been hit hard of late, and is in fact off a bit over 50 percent from its 52 week high. Currently trading at just over $36, Agnico-Eagle is actually closer to its yearly low in the range of $31.
However, with an annualized dividend payout of $.80, investors are attaining a dividend yield of nearly 2.2 percent, and at this current share price, there's lots of room for capital gain as well. The good news here is that Agnico just raised its quarterly dividend from $.16 to $.20 - showing some positive estimations for the future and a target price of just under $46 per share.
Analysts are split between Buy and Hold ratings, but on this one, I would purchase. The share price is at a near low, and with an upward moving dividend, things are likely to be looking positive in both the short and the long run. I recommending buying shares of Agnico-Eagle Mines.
Barrick Gold Corporation (NYSE:ABX) has a focus primarily on engaging in the production and the sale of gold. In addition, it operates exploration and mine development on a global basis. The company currently pays an annualized dividend of $0.60 per share, yielding investors just under 1.25 percent. This is up from a quarterly $0.12 dividend of less than one year ago.
The company's fourth quarter 2011 earnings were close to those of the same quarter of last year, with $959 million ($0.96 per share) and $961 million ($0.97 per share) respectively. Barrick's adjusted net earnings. However, rose 15 percent to nearly $1.2 billion, or $1.17 per share). This is up from $1.02 billion, or $1.02 per share, of the prior year's period.
Analysts overwhelmingly stated a Buy rating on this stock, and rightly so. Trading in the high $40s, almost dead center between its 52 week high and low share price, this one will be especially attractive if it were to drop below $45.
Hecla Mining Co. (NYSE:HL), along with its affiliates, is involved primarily in the discovery, production, and marketing of precious metals, with a key focus on gold, silver, lead, and zinc. The company just recently adopted a policy with regard to its dividend payment on common shares that will essentially link its dividend payment to investors on the company's average quarterly realized price of silver in the preceding quarter.
Based on this, the company declared a $0.0125 quarterly dividend, payable to investors in late March. Given its current share price of just over $5, this should yield investors 1 percent. With the company reporting fourth quarter net earnings of just over $18.5 million - up from a loss nearly $10 million in the same quarter last year - I recommending buying shares of Hecla Mining, especially if the share price dips below $5.
Gabelli Natural Resources, Gold (NYSE:GNT) actually stands out as a very unique opportunity. Here you will actually find a fund that seeks out both capital appreciation as well as high income by making investments in a portfolio of securities that are issued by companies involved in the natural resource and gold industry sectors, and subsequently obtaining income via a strategy of writing options.
I definitely rate this as a buy for those who are seeking income because this fund's strategy is to pay its common shareholders regular monthly cash distributions of part or all of the taxable income from its investment company. This income includes both ordinary income as well as short-term capital gains.
In addition, this fund also plans to make distributions on an annual basis of its net capital gain. At present, Gabelli Natural Resources, gold is trading at just over $16 per share and is yielding a bit under 12 percent - an almost unheard of return in today's market. Even at $16 or a tad bit above, I recommend purchasing this stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.