Is Polymetal a bargain compared to its competitors or are there better options out there? Let’s explore.

Will FTSE 100 mining stocks go higher?

Three Footsie mining stocks on my watchlist have made flying starts to 2022.

The Anglo American (LSE: AAL) share price climbed 34% following a $12bn increase in operating profit and a $1.7bn net debt reduction. Over a third of the miner’s 2021 EBITDA came from platinum group metals. Looking ahead, the company should prove resilient to geopolitical uncertainty. Anglo American, which is up 33% in a year, operates on six continents and has no Russian presence, unlike Polymetal.

Antofagasta (LSE: ANTO) is also racing ahead of the Polymetal share price, rising 22% this year (but down 10% over 12 months). As copper mining is the lifeblood of this Chilean multi-national’s business, shareholders will be encouraged by Goldman Sachs‘ 12-month copper price target of $13,000 per tonne. Antofagasta can build on a robust financial position after earnings per share rocketed by $87.80 last year.

Rio Tinto (LSE: RIO) stock completes the trio — it’s up 25% in 2022, but only up 4% in a year. Iron ore production accounts for almost 78% of its underlying earnings. In 2021, Rio Tinto generated +60% net cash and ordinary dividends per share rose 71%. Moreover, China’s iron ore imports remain stable in 2022, despite its economic slowdown. This is good news for the Rio Tinto share price.

With global interest rates rising, metal prices and mining stocks may fall so all of these shares come with risks. However, I believe the metals bull market could just be beginning as production seems unlikely to meet demand. For me, the outlook remains positive while supply side issues persist.

Will the Polymetal share price go lower?

Polymetal’s focus is precious metals, particularly gold and silver. It has operations in Russia and Kazakhstan. Although it consistently increased production over five years, the share price has been hurt by liquidity troubles caused by sanctions on Russian banks.

In further worrying signs, Polymetal postponed its decision on its 2021 final dividend payment. And Deloitte recently resigned as its auditor, threatening its London Stock Exchange listing.

Arguably, the stock’s substantial decline and a dirt cheap price-to-cash-flow ratio of 1.4 mean the risks it faces are priced in. Nascent plans to separate its Kazakh assets from the rest of the business lifted the Polymetal share price somewhat in recent days.

Nonetheless, I’m pessimistic about Polymetal shares. Headquartered in Cyprus, it avoided direct sanctions like those levied on Roman Abramovich’s Evraz. In a rapidly evolving situation, this could change.

The mining shares I’d buy now

Exposure to metals plays an important role in my diversified portfolio. I’m impressed by all three FTSE 100 stocks on my watchlist. They have strong balance sheets and are collectively spread across different geographies and commodities. I’d divide any spare cash between them.

By contrast, I see potential for further declines in the Polymetal share price. It’s simply too risky for me to buy at present, so I’m looking elsewhere for a solid gold miner.

The post Will FTSE 100 miners outshine the Polymetal share price in 2022? appeared first on The Twelfth Magpie.

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Charlie Carman has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

While payouts can never be guaranteed, one way of taking the sting out of inflation is to own big dividend stocks. Here are three that currently take my fancy from the FTSE 100.

Dependable dividend hiker

Top-tier insurance behemoth Legal & General (LSE: LGEN) would definitely be on my list of inflation-busting shares to buy. Analysts currently have the company returning 19.4p per share in FY22. At today’s share price, this becomes a yield of 6.7%. That’s pretty much double what I’d get from the index as a whole!

Yes, the nature of Legal & General’s business means its share price performance is dictated to some extent by the health of the UK (and global) economy. However, a 22% return over the last five years beats the frankly pretty awful 5% achieved by the FTSE 100.

It’s also worth noting that, bar the anomaly that was 2020, the company has been a consistent hiker of cash payouts. An already-sizeable dividend yield that keeps growing? That’s just what I’d be looking for if I were determined to protect my wealth from the “silent killer“. 

At just nine times forecast earnings, I’m not about to complain over the price either. 

Safe as houses

Housebuilder Taylor Wimpey (LSE: PSN) is another stock for tackling rising living costs. It’s got a great track record of returning increasing amounts of cash to its owners. This trend doesn’t look like reversing in 2022.

As things stand, the £5.5bn cap company has a stonking forecast yield of 7.9%. To put that in perspective, even the best Cash ISA right now offers just 0.61% in interest. Importantly, the extent to which this is likely to be covered by profit (and therefore likely to be paid) is also far higher than over at rival Persimmon. To me, this makes Taylor Wimpey the better buy of the two. 

Government pressure on developers to cover the costs of removing dangerous cladding from flats across the UK means housebuilders haven’t had the best of starts to 2022. However, news that prices in January climbed at the fastest annual pace in 17 years suggests the property boom still has legs to it. 

At eight times earnings, I’d be happy to buy Taylor Wimpey for the passive income it throws off. 

Monster yielder

A final stock I’d consider buying to counter the impact of inflation is precious metals group Polymetal International (LSE: POLY). At 9.3%, it’s currently one of the highest-yielding stocks in the FTSE 100.

Normally, such a huge number would be a red flag. Since dividend yields are negatively correlated with share prices (when one goes up, the other goes down), Polymetal’s incredible cash returns imply investors are concerned about the company’s outlook. 

That’s probably not far from the truth. Clearly, the ongoing tension in Eastern Europe can’t be helping sentiment. Polymetal does, after all, operate mines in Russia and Kazakhstan. The gold price has also been in the doldrums recently.

That said, a lot of this looks priced in. The shares have tumbled 34% in the last year alone and now trade at less than seven times earnings. That’s arguably very cheap considering the regularly-hiked dividend should be comfortably covered by earnings.

Throw in the diversification Polymetal offers by operating in a completely different sector and I think this is another worthy candidate for an inflation-busting portfolio.

The post 3 inflation-busting FTSE 100 dividend stocks to buy appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

FTSE 100 inflation-beater

Polymetal International (LSE: POLY) might not be on the tip of many investors’ tongues. However, the company is one of the top 10 global gold producers in the world. It’s also among the top five silver producers.

Taking this sector hit into account, the £7bn-cap could prove a canny buy as investors become increasingly skittish over rising prices. Gold is, after all, traditionally seen as a way of protecting portfolios. It can’t be devalued in the same way as a currency. Its supply is limited too. 

But it’s not just inflation that makes me bullish on the outlook for gold. Covid-19 infection levels in some parts of the world, including the UK, are rising again. Many stocks, particularly those across the pond, are beginning to look priced to perfection. All this could force investors to seek solace in safe havens.

So how do the shares shape up?

As investors might expect from a company that produces a hitherto out-of-favour precious metal, POLY’s share price performance hasn’t been all that great. In fact, the stock’s 20% lower in value than it was 12 months ago.

However, tracking the stock’s movements for a single year doesn’t really tell me much. In fact, anyone holding POLY since 2016 will still have seen their capital grow by roughly 60%. This highlights to me the importance of judging performance over a suitably long period of time.

It’s also evidence that I don’t necessarily need to expose myself to volatile junior mining stocks to make good money from the sector.

Personally, I regard the downward trajectory of Polymetal shares as a buying opportunity. Right now, the stock can be snapped up for just 9 times forecast earnings. That looks a tempting valuation, given the consistently high margins the company posts. These could push higher if the gold price keeps rising. A PEG ratio (price-to-earnings growth) of just 0.5 also suggests new investors will be getting a lot of bang for their buck.

Buyer beware

Now you probably don’t need me to tell you that investing in a precious metals miner is can be a wild ride. It’s not just that mining for gold is tough and costly work. Companies like POLY also have no control over the price of the shiny stuff. Owning shares in a company operating in Russia and Kazakhstan also requires a certain mindset.

Having said this, I’d be partly compensated for this risk via dividends — something I wouldn’t receive from buying a fund that merely tracked the gold price. As things stand, analysts have the FTSE 100 company throwing off 98p per share in FY21. That’s a stonking yield of 6.9% at the current share price, covered 1.5 times by profit.  

Top of the stocks

Even if a full-on market crash doesn’t happen in the near future, having some exposure to a commodity whose price tends to be negatively correlated to equities may allow me to sleep more soundly at night.

Considering the value and income on offer, POLY would likely top my list of potential candidates to buy in this space.

The post Gold is on the move. Time to buy this cheap FTSE 100 dividend stock? appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As my Foolish colleague Malcolm Wheatley commented in his recent piece: “Inflation is a devastating destroyer of wealth and standards of living.” Strong words but he’s absolutely on the money.

Like Malcolm, I believe the best way to beat inflation is via the stock market. However, there are certain parts that could prove particularly good destinations for my cash.

Buy quality to beat inflation

I’m a big fan of quality stocks. These are companies that have strong brands, sound finances, consistent earnings, and big profit margins. On a geekier note, they also tend to be capital-light and able to generate great returns on the money they invest, otherwise known as Return on Capital Employed (ROCE). Let me explain.

Naturally, I want a business that produces a higher return than inflation. If prices jump by 10%, any stock generating the same ROCE (or worse) isn’t really doing anything. However, one generating a ROCE of 20% is still doing well for investors, under the circumstances.

I’m not the only one who thinks this is a good way to beat inflation. Biased he may, be but top UK money manager Terry Smith thinks stocks in the Fundsmith Equity fund have that quality tilt which should preserve (and eventually enhance) investors’ wealth. That said, there’s nothing to stop the actual value of these holdings from falling if investors head for the exits.

Grab some shiny stuff

Another way to beat inflation would be to have some exposure to precious metals. One obvious candidate here is gold. Historically, anything connected to the shiny stuff tends to do well in inflationary times because of its trusted ability to hold its value.

If stuffing a load of gold bars under the bed doesn’t appeal, UK investors have a number of options. In the FTSE 100, there’s producer Polymetal International. In the FTSE 250, there’s Centamin. If diversification was important, I could buy an exchange-traded fund (ETF) that holds the biggest miners around the world.

Another option would be to buy a passive fund that tracks the gold price. This might be the least risky option since it avoids any company-specific risks. That’s not to say it’ll always be a comfortable ride, of course, especially if interest rates rise. After all, gold doesn’t generate income on its own! 

Don’t forget real estate

Thanks to the growing desire to work from home, post-coronavirus, the UK property market has been in fine form in 2021. However, owning stocks that have links to real estate can also help investors beat inflation. 

Step forward REITs (Real Estate Investment Trusts). These are listed companies that generate income for holders from property. Although nothing can be guaranteed, this asset tends to increase in value when inflation rises because price increases are passed through in rental leases (assuming demand for property is there). 

As you might expect, there’s no shortage of options out there for UK investors. These can be invested in office space, healthcare buildings and retail units. Thanks to the huge and growing popularity of online shopping however, my favourite pick in this space is warehouse owner Tritax Big Box.

The post 3 ways to beat inflation with stocks appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Fundsmith Equity. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As a long-term investor, the weekend is always a great chance for me to turn off and ignore market noise. It is much easier than on some volatile weekdays when I’m tempted to check up on the FTSE 100 and my portfolio for movement. 

Luckily, with the long weekend on its way, I get an extra day to reflect on my portfolio without market movement distracting me. And this weekend, I’ll be deep-diving into these two companies to see if I should buy shares. 

Diageo

Diageo (LSE: DGE) has long been one of my favourite holdings — and it’s not just because it owns Guinness. The FTSE 100 share is a strong business that owns some of the most well-known brands on the planet. In the past 12 months, Diageo’s share price has risen more than 18%, from 2,860p to 3,390p today. 

There are a number of reasons why I would consider increasing my position in Diageo. As summer rolls in, I’m getting more bullish on Diageo’s position among reopening stocks. Having taken a hit last year as Covid-19 shut restaurants and bars, it has since shown remarkable resilience. Home consumption saw first-half 2021 sales increase 0.9%, including a 10% rise in the UK. This allowed Diageo to maintain a strong £1.58bn profit year-on-year. Now, with vaccinations rolling out and the economy reopening, the company expects operating profit growth to increase by at least 14% this year. 

My biggest worry when it comes to Diageo is its rising net debt, which sits at almost £15bn as of December 2020. Should interest rates rise, it could cause the company a headache and reduce its ability to return shareholder value. 

Despite this, Diageo remains one of the strongest brands in the world. As life returns to normal and people look to have a good time, I’m thinking that there’s still a lot of potential for its share price. 

Vodafone 

I’m moving away from alcohol and over to telecommunications for my next stock pick. Vodafone Group (LSE: VOD) has been on my portfolio shortlist for years, but I’ve never taken the plunge. Despite being a top FTSE 100 income stock, I always felt it was too expensive for me. 

The leading British telecom giant has seen its share price remain flat in the past 12 months — albeit with some dips and surges in between. At 129p a year ago, now sitting at roughly 128p, there has been little to write home about. 

However, Vodafone’s share price fell 10% last week thanks to investor skittishness following its quarterly earnings report. I, for one, actually found the company’s plans quite exciting. CEO Nick Read outlined the company’s plan to invest heavily in its network amid the 5G boom. Despite this resulting in short-term cash burn, I am excited that the company is so open about self-investment. Covid-19 has accelerated global digitisation greatly, meaning demand for the pipes that run the broadband system will grow enormously. 

But that doesn’t eliminate the business’s already massive debt pile, which sat at nearly £40bn at the tail end of 2020. This will only be made more worrisome by the company’s 2.6% revenue deficit in 2020. 

However, its forward-thinking plans have got me excited, while Vodafone’s recent price drop makes it a more enticing investment opportunity for me.

The post 2 FTSE 100 stocks to consider buying this bank holiday weekend appeared first on The Twelfth Magpie.

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Jamie Adams owns shares in Diageo. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Buffett buys gold

On Friday, it was revealed that the greatest investor since the Second World War had bought gold. To be precise, the Sage of Omaha has added the world’s second-largest miner of the shiny stuff — Canada-based Barrick Gold Corp — to Berkshire Hathaway’s portfolio in Q2.

In all, Buffett bought 20.9m shares, or 1.2% of the company. Based on the closing price at the end of last week, this amounts to a stake worth $564m.

That may be a drop in the ocean for Berkshire Hathaway (market value: $500bn) but it still represents a significant development.

Why significant?

Buffett’s purchase of Barrick matters because the master investor has previously never rated gold. The precious metal, he once said, “doesn’t do anything,” thereby violating his rule to only invest in stuff that’s actually useful.

The fact he’s now willing to invest in a company like Barrick when its shares are already at a seven-year high shows just how much the pandemic has impacted his strategy and where he now sees value. 

And who can blame him? With more money-printing likely in the US (further devaluing the dollar), investors will be looking for ways to hedge against inflation. This will likely push the price of gold even higher (beyond the record high hit earlier this month), which also increases the profit margins of those who mine it.

In addition to this, the shiny stuff also tends to rise in value when stocks crash, which could still happen in the event of a second Covid-19 wave later in 2020. We’re certainly not in the clear yet!

Should I buy Barrick too?

Following Buffett into Barrick is certainly an option. Just know that you’ll probably end up paying a far higher price than he did.

Unsurprisingly, Friday’s news sent the miner’s share price rocketing in after-hours trading. As word of Buffett’s deal continues to spread, I wouldn’t bet against it going even higher this week. 

Another thing worth mentioning is that any UK investors wanting to buy US shares must first complete a form with their broker before doing so. 

An alternative way of getting exposure to the miner is via a fund. The iShares Gold Producers UCITS ETF is one example.

Despite having 55 stocks in its portfolio, just over 9% of this passive fund’s assets are tied up in Barrick.

The only company it has more exposure to is Newmont — the world’s biggest producer of the precious metal. The fund has an annual charge of 0.55%. It’s up 37% year to date.

Other stocks to consider

If you’d rather stick to large, London-listed stocks however, there’s always the option to buy stakes in FTSE 100 miners Polymetal International and/or Fresnillo instead.

Polymetal has nine gold- and silver-producing mines across Russia and Kazakhstan. Fresnillo is the world’s largest producer of silver but also the second biggest gold miner in Mexico. If you’d bought either stock during the market crash in mid-March, you’re probably very close to doubling your cash by now. 

If you agree with Buffett that demand for gold is likely to rise for the foreseeable future, there could be even more gains on the way.

The post Warren Buffett buys gold! Should you? appeared first on The Twelfth Magpie.

More reading

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers owns shares in iShares Gold Producers UCITS ETF. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Poly-talented

The Polymetal share price has jumped 44% in the last three months, and 86% over the year, at a time when the wider index has been heading in the other direction.

Gold famously does not correlate with stock markets – the price typically climbs when investors are bearish and falls when they are bullish. Right now, investors are definitely the former, as they fret about the US-China trade war, Brexit, slowing global growth and falling interest rates, and the Polymetal share price is the beneficiary.

Time to shine

The Russian multinational mining firm isn’t just a passive beneficiary of gold price movements, it recently delivered a robust half-yearly update showing revenues up a thumping 20% over the last year and adjusted earnings up 34%, while declaring it is firmly on track to meet production guidance. Talk of a special dividend and a potential move into rare earth metals added to the shine.

I braced myself for a hefty valuation, given its recent surge, but the £5.5bn group is trading at a modest 12.4 times forecast earnings, with a similarly undemanding PEG of 0.7.

One of the arguments against buying physical gold is that it does not pay interest, but gold miners do give you an income in the shape of dividends. Right now, Polymetal offers a forecast yield of 4% and cover of 1.9.

Forecast earnings growth of 15% this year and 17% in 2020 look highly promising, by which point the yield is expected to have hit 4.7%. The risk is that a sudden burst of positive sentiment could sink the gold price and Polymetal with it.

Gold may well be due a correction, after recent strong growth. So don’t expect recent strong growth to continue, but if you haven’t got any exposure in your portfolio, this could be a good way to get it.

Copper and gold

Chilean miner Antofagasta (LSE: ANTO) is seen as a copper specialist but it does dig for gold as well, and it’s been doing well on that front, with sales up 117.8% to 148,300 ounces in the first six months of 2019, helped by higher grades at its Centinela mine, which delivered EBITDA earnings of $532.5m.

Copper is still the main attraction and Antofagasta has been doing well here too, posting a 19.1% rise in total revenues to $2.5bn, as higher copper sales volumes offset a 6.3% drop in the realised copper price.

This combination of gold and copper, two of the most non-correlating assets I can think of right now, gives the stock natural in-built diversification, given that demand for copper rises while the global economy is expanding, and demand for gold rises once it contracts.

However, with sentiment firmly in decline right now, this makes the case in favour of Polymetal seem stronger as it enters the FTSE 100. Although some of you may prefer to wait and see if the gold price does correct from today’s high.

The post I’d welcome Polymetal International to the FTSE 100 by buying it today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It’s since taken a step back on some light profit taking. But make no mistake, investor demand for the safe-haven remains rock-solid. And this was underlined by recent data from the World Gold Council. According to the body, some $5.5bn worth of inflows, equivalent to 127 tonnes, went into global gold-backed exchange-traded funds (ETFs) in June “as geopolitical uncertainty increased and central banks signalled a shift to a more accommodative policy over the coming months.”

More to come?

This was the largest monthly inflow (in dollar terms) since 2012, and there are numerous reasons to expect gold holdings to keep on bulging.

As signs of a more doveish monetary policy from the Federal Reserve have risen, expectations of interest rate cuts from Brussels and London to Beijing have also gained traction. And the relentless stream of poor economic data from all over the globe means the prospect of several benchmark rate reductions is only likely to rise as 2019 progresses.

Throw the unresolved issue of US-related trade wars into the bargain, Britain slipping closer to the Brexit cliff-edge, and Iran showing little signs of backing down in its high-stakes diplomatic spat with Washington, well there’s plenty of reason to expect bullion prices to keep making progress.

But there’s more than one way to capitalise on the rampant gold price right now. Rather than buy physical bars or coins, or invest in one of those aforementioned ETFs, I believe a much better way to make your money work for you is by buying into London’s listed gold producers.

Dividend darlings

Why? The payment of dividends to investors by such mining stocks are extra rewards which don’t come with playing the gold market. And some of the predicted dividends of  these businesses are pretty darn impressive.

Take Pan African Resources and Polymetal Resources and their forward yields around 4.5%. Or Trans-Siberian Gold and its 5.5% prospective yield.

Of course investors need to be prepared to take some of the risk associated with the mining industry, namely uncertainty over potential payloads and unexpected production disruptions which can hammer output levels and ramp up costs.

However, those diggers I’ve mentioned are all making brilliant progress operationally. Speaking of which, Acacia Mining announced this week gold production surged almost 20% year-on-year in Q2, thanks to blowout production in Tanzania. And what’s the forward yield over at this particular share? A monster 6.2%, if you’re asking.

While all of these yields are pretty delicious, it’s possible to get hold of some bigger dividend payers in the near term at least. However, if you’re looking for a blend of jumbo payouts and the possibility of some stratospheric share price gains in the months ahead, you may well be better off ploughing your investment cash into these mining mammoths instead.

The post Hot right now! Are these the best dividend stocks to buy today? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’ve long celebrated Polymetal International (LSE: POLY) as a great share to buy on the robust outlook for gold prices, a situation created by low interest rates and intense geopolitical and macroeconomic uncertainty.

There’s a growing pile of evidence that backs up these robust price forecasts for 2019 and beyond. Strong gold demand from institutional investors is something I’ve touched upon in depth before, but latest data from the World Gold Council (WGC) shows just how strong metal off-take from other sources is as well.

Gold demand bubbles higher

According to the organisation, central banks bought 145.5 tonnes of gold in the three months to March for the purposes of “diversification and a desire for safe, liquid assets.” This was also the highest level of first-quarter buying from such institutions for six years.

But demand for the metal as a pure rush-to-safety asset wasn’t the whole story behind strong gold demand in quarter one. Indeed, the WGC also noted that global jewellery sales rose in the period because of resplendent Indian buying, supported by a weaker rupee and the onset of the traditional wedding season. In fact, gold jewellery sales in the country were 5% higher year-on-year at 125.4 tonnes.

Today looks as good a time as any to get exposure to gold, then, although theoretically it’s always a good idea to have exposure to gold in your investment portfolio as a lifeboat in troubled times when your other holdings could take an almighty smack.

I would argue that the best way to go about this is by holding gold stocks that pay a dividend, rather than the physical metal itself which, well, doesn’t. And what a great company Polymetal is in this respect, the digger sporting giant yields of 5.4% and 5.8% for 2019 and 2020 respectively.

Throw a dirt-cheap valuation into the mix — the FTSE 250 firm trades on a P/E ratio of 9.3 times right now — and I reckon it’s a brilliant income share to load up on right now.

Yields north of 9%

Bovis Homes Group (LSE: BVS) is another big dividend payer I’ve tipped before, in this case on the back of strong homes demand from first-time buyers and a shocking shortage of affordable housing in the UK.

And fresh data from Nationwide this week has reinforced my bullish take on the business. According to the building society, mortgage demand from first-time buyers continued to climb in April, with loans creeping even closer towards levels seen just prior to the financial crisis a decade ago. 

It’s not a shock, then, that City analysts are expecting Bovis’s earnings, like those over at Polymetal, to keep growing through to the end of next year at least. Consequently dividends are expected to keep rising at the builder, too, resulting in monster yields of 9.3% for 2019 and 9.6% for next year.

I’d also be happy to hold this share indefinitely given the many years it will take the government to solve the homes supply problem. I reckon Bovis has all the tools to pay exceptional returns and, given that it trades on a low forward P/E multiple of 10.3 times right now, consider it to be one of the best bargains on the FTSE 250.  

The post Dividend alert! A 5% and a 9% yielder that I’d buy today and hold forever appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

If I wasn’t an active investor in the stock market, I’d be seriously bricking it right now.

The paltry interest rates on offer from traditional savings products means that Britons need to be extremely mindful of how to go about saving for retirement. I know that I couldn’t afford to survive solely on the paltry benefit from the State Pension, which currently sits below £170 per week. This would barely cover basic expenditure for most people, and so it’s pretty shocking to find that millions of us are sleepwalking into pensioner poverty by not taking charge of our finances.

It’s time to get busy rather than sit on your hands and get worried, then. Fortunately the London stock market is chock-full of brilliant dividend shares that can help you build a decent income pre- and post-retirement, and so for many of us there’s still opportunity to retire in comfort.

Gold star

One great way to protect yourself from suffering pensioner poverty is by buying shares in mining giant Polymetal International (LSE: POLY).

There’s plenty of evidence out there to show how investor demand for gold is bubbling higher and higher, a hardly unsurprising phenomenon given the tense geopolitical and macroeconomic environment right now. And the World Bank is just one institution that’s expecting metal purchases to keep improving in the coming years.

In its latest Commodity Market Outlook it estimates that bullion will average $1,310 per ounce in 2019 — up from its current price around $1,280 — before advancing further still next year to average $1,360. In particular, the World Bank cites expectations of “a prolonged pause in interest rate hikes by the US Federal Reserve” as reason to be bullish, and even suggests that rates could be cut in the near future.

Dividends dancing higher

City consensus certainly supports the idea of strong precious metal values in the coming years, and therefore of suggestions that Polymetal’s profits should keep rising.

The digger’s bottom line anticipated to rise by high single digit percentages through to the close of 2020, these cheery broker estimates also helped by the FTSE 250 firm’s efforts to pull cash costs down. What’s more, with Polymetal having recently upgraded gold reserve forecasts for its world-class assets in Russia, the stage looks set for profits to keep rising well into the next decade.

As a consequence, the number-crunchers reckon that dividends should continue to head higher over the next couple of years at least, meaning that share pickers can sink their teeth into giant yields of 5.2% and 5.6% for 2019 and 2020 respectively.

Big yields aren’t the only thing to celebrate at Polymetal, though – its low valuation (illustrated by a forward P/E ratio of 9.6 times) putting the icing on the cake. If you’re seeking a brilliantly valued, big-dividend-paying stock to supplement your income now and in the future, I reckon this gold producer is a terrific buy.

The post Worried about your State Pension? I wouldn’t be, with this 5.5% dividend yield appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.