4 Silver Miners That Pay a Dividend

4 Silver Miners That Pay a DividendWith interest rates stuck at all-time lows, and expected to remain there for the foreseeable future, investors are looking to commodities in hopes of evading the devaluation of the U.S. dollar. On the flip side, recent moves by the Fed and European Central Bank to “beef up” their respective stimulus efforts have many investors thinking about future inflation. Precious metals have long been the go-to asset class for investors looking to fortify their portfolio against inflation; however, investing in the companies that mine for these resources is also a viable strategy [for more precious metals news and analysis subscribe to our free newsletter].

For those looking at an alternative, or complement to their gold holdings, below we outline four silver miners that currently pay a dividend – providing some yield during low interest rate times, and providing a hedge against if it inflation hits.

Silver Wheaton Corp. (NYSE:SLW)

  • Share Price: $39.49
  • Dividend Yield: 1%
  • Market Cap: $14.3 billion
  • Payout Ratio: 24%
  • Beta: 1.23

Based out of Vancouver, Silver Wheaton is the largest “pure play” silver mining company available to U.S. investors. Up until 2006, Goldcorp Inc. (NYSE:GG) controlled the company, but in 2008 Goldcorp divested completely from Silver Wheaton. Silver Wheaton is a silver streaming company – it forms agreements with silver mines to purchase their silver at a fixed cost for a set period of time. Over 24 million ounces of silver are produced through these 15 silver and three precious metal purchase agreements [see also 25 Ways To Invest In Silver].

Through the agreements, Silver Wheaton is able to purchase silver at a cost of roughly $4 per ounce, from 13 mining partners operating 17 mines, with 4 more mines in development. From a geographic perspective, Silver Wheaton generates most of its silver from mines in Mexico (roughly 40%), followed by Portugal and the United States.

The company currently pays a $0.10 per quarter dividend to shareholders; with the share price near $40, that equates to a dividend yield near 1%. The firm’s 1% dividend yield likely isn’t too enticing for income-hungry investors, but its sheer size and position in the industry make it a worthy consideration.

Due to a high correlation between the price of silver and Silver Wheaton stock, a rise in the price of silver indicates a high probability Silver Wheaton’s price will rise. A decline in the price of silver is also usually seen in the company’s stock.

Pan American Silver Corp. (NASDAQ:PAAS)

  • Share Price: $19.80
  • Dividend Yield: 1%
  • Market Cap: $3.01 billion
  • Payout Ratio: 4%
  • Beta: 1.06

Another Vancouver, Canada based firm, Pan American is primarily involved in the exploration, development and production of silver mining operations. The company has eight mining operations currently underway in Mexico, Peru, Argentina and Bolivia. In addition to silver, the company also extracts and sells gold, zinc, lead and copper. Founded in 1994, Pan American is the second-largest silver miner in the world.

Paying a $0.05 dividend per quarter, and with the share price near $20, the dividend yield for the stock is right around 1%. The payout ratio, which is calculated as dividends divided by earnings per share, is quite low at 4%. This shows the company is primarily focused on growing its operations and using most of its cash to find and finance future mining projects [see also Silver Slaughtered: Time To Buy?].

The Pan American stock price is linked to the price movements of silver; an overall rise in the commodity puts upward pressure on the stock, while falling silver prices put downward pressure on the stock.

Silvercorp Metals Inc. (NYSE:SVM)

  • Share Price: $6.01
  • Dividend Yield: 1.73%
  • Market Cap: $1.03 billion
  • Payout Ratio: 28%
  • Beta: 1.67

Focusing on exploration, development and production operations in China and Canada, Silvercorp currently has five mining operation – four of which produce silver. Gold, lead and zinc are also mined. Silvercorp is China’s largest silver producer, and is based out of Vancouver. While primarily focused on China, the company also operates a silver-lead-zinc mine in northern British Columbia, Canada [see also Investing In Silver: The Definitive Guide].

The company recently paid a quarterly dividend of $0.026 per share. If that continues, the annual dividend yield based on a $6 share price is 1.73%. The dividend amount has frequently changed since 2007, though, but usually increased. Since the end of 2008, when the dividend was $0.016, the dividend has steadily risen except for one decline in the latter part of 2009 when the rate fell from $0.02 to $0.018.

Silvercorp expects a new mine to be operational in 2013, and plans to expand by more small-scale projects in China and self-funding their growth.

Hecla Mining Company (NYSE:HL)

  • Share Price: $5.88
  • Dividend Yield: 1%
  • Market Cap: $1.69 billion
  • Payout Ratio: 52%
  • Beta: 1.65

Based out of Coeur d’Alene, Idaho, Hecla discovers, acquires, develops and produces silver, gold, lead and zinc mines.  Founded in 1891, the company has two mines operating in Alaska and Idaho. That makes it the oldest precious metal mining company in North America, and the largest silver producer in the U.S.

In 2011 the company produced 9.5 million ounces at a cost of $1.15 per ounce. Stock movements are highly correlated to silver; when the price of silver is rising it creates more favorable margins for the company and pushes up Hecla’s stock price. When declining silver prices squeeze those margins, the share price typically declines as well [see also Jim Rogers: Silver Is a Better Investment Than Gold].

Hecla has a two-part dividend policy. The company has a minimum annual dividend of $0.01 per common share, and also has a silver-linked dividend. The silver-linked dividend fluctuates as it’s related to the price that Hecla receives for its silver. In 2012, the total quarterly dividend ranged from $0.0025 to $0.0225, with the total dividend equalling $0.06 (annual), or a 1% dividend yield based on a $6 share price. While there is some variability in the dividend amount, rising silver prices are favorable for both dividend and capital gains investors.

Things to Remember

Dividend yields fluctuate as the dividend policy of the company changes, and as the stock price changes. Sharp changes in the stock price can make a dividend yield look artificially low or high. Check the company’s investor section on its website to stay up to date on any news announcements which may affect shareholders and dividend policy. The stock price of silver streamers and silver miners will typically move with the price of silver, so investors should keep an eye on the overall trend of both the stock and silver before jumping in.

This article was originally written by Cory Mitchell, and posted on CommodityHQ.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!