Forget artificial intelligence (AI) stocks - the precious metals space is in the midst of a seriously impressive rally, with gold futures (GCM24) hitting new highs above $2,400 and silver (SIK24) now knocking on the door of $30. The big gains are being driven by stubbornly hot inflation, with rising prices expected to delay those Fed rate cuts until later in the year - or possibly push them all the way out into 2025.
And now, Bank of America has hiked its forecasts for precious and industrial metals, citing the increasing demand and supply constraints. The analysts see gold averaging $2,500 in Q4, and they expect silver to outperform gold on surging industrial demand. Plus, with geopolitical conflicts heating up, investors are hungrier than ever for safe havens.
With all this going on, precious metals streaming companies are one way to invest in the trend. These guys give upfront payments to miners in exchange for the right to buy a chunk of their future metal production at set prices. It's like getting all the benefits of precious metals, without the risk and expense of running a mine directly.
One company leading the pack here is Wheaton Precious Metals (WPM). They have a diverse portfolio of streaming deals across gold, silver, and even cobalt. With WPM rated a "Strong Buy" and analysts projecting more upside to come, the stock has emerged as an attractive option for investors seeking exposure to precious metals - especially given its regular dividend payouts. So, if you're looking to get in on the precious metals action, here's a closer look at this silver dividend stock.
About WPM Stock
Valued at over $23 billion by market cap, Wheaton Precious Metals Corp. (WPM) is a big player in the precious metals game, but they're doing things a bit differently. Instead of digging up the earth themselves, they strike deals with miners, paying cash upfront for the right to buy metals later at a set price. It's a smart move that lets them ride the highs of the market, without the heavy lifting and risks that come with traditional mining.
Lately, WPM's stock has been riding higher, following the pace of commodities prices. The shares are up 8.5% on a year-to-date basis, and that includes a 20% surge over the past month alone.
Now, if we talk about how the stock is valued, WPM's forward P/E ratio is sitting at 42.12. That might sound steep, but it's actually a modest discount compared to silver mining peers like Pan American Silver (PAAS), at 50.66x earnings, and Endeavour Silver (EXK), with an earnings multiple over 47x.
WPM also knows how to treat its shareholders right. They offer a quarterly dividend of $0.16 per share, which yields 1.18% at current levels. With a payout ratio of 51%, the dividend is well covered by earnings.
In its last earnings report for Q4 2023, WPM booked EPS of $0.36, which was an upside surprise compared to consensus estimates. Q4 revenue was up by 20.1% from the previous year, hitting $313.47 million, thanks to more metal production and higher prices for gold and silver.
For the whole of fiscal 2023, they pulled in $1.07 billion in revenue, which is 12.3% better than in 2022, and their EPS was up by 15.7%.
Strategic Moves at Wheaton Precious Metals
Wheaton Precious Metals is also beefing up its portfolio with some strategic moves that spell growth down the line. They snagged a new silver stream deal on the Mineral Park Mine in Arizona from Waterton Copper Corp. This deal adds a top-notch asset to their collection and opens up new exploration opportunities.
WPM also shook hands with Orion Resource Partners, grabbing existing streams on the Ivanhoe Mines' Platreef Project and BMC Minerals' Kudz Ze Kayah Project. And for the cherry on top, they clinched a deal for a gold stream on Dalradian Gold's Curraghinalt Project.
What's the Analyst Forecast for WPM Stock?
Analysts are targeting EPS growth of 5.1% for fiscal year 2024, with revenue expected to climb 19%. Looking out to 2025, the forecast calls for EPS growth of 12% and revenue growth of 15%.
When it comes to Wall Street's ratings, it's pretty much a standing ovation for WPM. Out of 12 analysts, 9 are shouting "Strong Buy," one is leaning towards a "Moderate Buy," and the remaining two are playing it cool with a "Hold."
Analysts have set a mean price target of $56.19 for WPM. That suggests a roughly 5% upside from current levels, though the Street-high price target of $70 indicates a 30% premium.
Conclusion: The Silver Lining in Precious Metals Investing
In a nutshell, if you're looking for a solid precious metals play with a nice dividend kicker, Wheaton Precious Metals (WPM) is definitely worth checking out. With precious metals prices making waves and analysts giving WPM the thumbs-up, now might be the perfect time to add this silver streaming star to your portfolio.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
