While gold (GCQ24) traditionally reigns as the preferred safe haven, silver (SIU24) is also reclaiming its historical allure as a store of value. The precious metal has staged an impressive comeback this year, climbing above the key $30 level, and rewriting the highs from 2021 in the process.
Cash silver (SIY00) set new highs above $31 as recently as last week, and is up 31.5% in 2024 - outperforming even gold’s impressive 19.5% returns this year. Following the industrial metal’s major technical breakout, the forecast for silver looks bullish for the second half of 2024 and beyond.
Given this promising outlook, investors looking to add silver exposure could consider buying three dividend-paying stocks: Pan American Silver Corp. (PAAS), Hecla Mining Company (HL), and Silvercorp Metals Inc. (SVM). These "Strong Buy" opportunities not only provide exposure to the silver market's upside potential as underlying commodity prices rise, but also offer a passive income stream for investors.
Silver Stock #1: Pan American Silver
Headquartered in Vancouver, Canada, Pan American Silver Corp. (PAAS) shines as a leading silver and gold producer in the Americas, with mines spanning Canada, Mexico, Peru, Brazil, Bolivia, Chile, and Argentina. The company owns the Escobal mine in Guatemala and holds stakes in various exploration and development projects. With nearly three decades of experience, Pan American Silver is celebrated for its sustainability and operational excellence.
Valued at $8.4 billion by market cap, shares of this silver producer have rallied 52% over the past 52 weeks and 47.9% on a YTD basis, outperforming the broader S&P 500 Index’s ($SPX) gains during both of these periods.
Beyond its growth prospects, the company is also committed to rewarding its shareholders. On June 3, Pan American Silver issued its most recent dividend payout of $0.10 per common share. This brings its annualized dividend to $0.40, which translates to a 1.72% dividend yield.
Following the company’s better-than-expected Q1 earnings results after the close on May 8, shares of Pan American Silver popped 10.7% in the subsequent trading session. Q1 revenue of $601.4 million rose an impressive 54.9% annually, while adjusted earnings per share of $0.01 crushed Wall Street’s projections for a loss.
During the quarter, the company’s silver production hit approximately 5 million ounces, up 28.7% annually, which aligned with management's projections.
At La Colorada, a $9.6 million investment in new ventilation infrastructure was made to yield higher mining rates and increased output during the second half of this year, while upgrades at the Jacobina mine, including a $4.3 million investment in plant infrastructure, underscore the company's commitment to optimizing operations for sustained performance and potential production increases.
“We progressed our major projects, notably the new ventilation infrastructure at La Colorada and the plant upgrades at Jacobina, while returning $58.0 million of capital to shareholders through $36.5 million in total cash dividends paid and $21.5 million in shares repurchased,” commented CEO Michael Steinmann.
Management reaffirmed the fiscal 2024 guidance outlined in its fiscal 2023 Q4 earnings results. The company projects silver production to range between 21 million ounces and 23 million ounces. Additionally, total capital expenditure for the entire year is anticipated to land between $375 million and $395 million.
Analysts tracking Pan American Silver expect the company's profit to reach $0.59 per share in fiscal 2024, up 391.7% year over year, and rise another 94.9% to $1.15 per share in fiscal 2025.
Overall, PAAS stock has a consensus “Strong Buy” rating. Out of the nine analysts offering recommendations for the stock, seven recommend a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining one gives a “Hold” rating.
The average analyst price target of $23.81 is a discount to current price levels, as PAAS rallies alongside precious metals today. The Street-high price target of $25.96 suggests that the stock could rally as much as 7.5%.
Silver Stock #2: Hecla Mining
With a market cap of about $3.8 billion, Idaho-based Hecla Mining Company (HL) is a top low-cost U.S. silver producer with mines in Alaska, Quebec, and Canada. The company boasts exploration and pre-development properties in five premier silver and gold mining districts across the U.S., Canada, and Mexico, along with early-stage silver exploration projects and an office in Canada.
Shares of Hecla Mining have soared 29.8% on a YTD basis, and are up 5.5% over the past 52 weeks.
On June 11, the company paid its shareholders a quarterly dividend of $0.00625 per share. Its annualized dividend of $0.03 per share translates to a 0.42% dividend yield.
Hecla announced its Q1 earnings results on May 8, which topped Wall Street’s projections on both the top and bottom lines - triggering an 11.4% surge in its share price in the next trading session. Despite a marginal year-over-year decline, total sales of $189.5 million narrowly exceeded Wall Street’s forecasts. Adjusted EPS of $0.01 surprised to the upside, with analysts looking for a loss of $0.02 per share.
Hecla's Q1 showcased impressive operational strides, including the full restart of the Lucky Friday mine and notable gains in safety, environmental practices, and production efficiency. The Greens Creek segment, in particular, stood out with a solid 9.7% uptick in silver production from the previous quarter. Additionally, total silver production during Q1 reached approximately 4.2 million ounces, reflecting a solid 43% improvement compared to about 2.9 million ounces recorded in the final quarter of 2023.
Commenting on the Q1 performance, CEO Phillips S. Baker Jr. highlighted, “Silver demand for solar has been growing at a remarkable 17% annual growth rate over the past five years and is projected to continue. In India, buyers long known as being price sensitive, are importing silver in record quantities despite higher silver prices. Solar and India represent more than 35% of world demand and continues to grow.”
For fiscal 2024, management predicts total silver production to range between 16.5 million ounces and 17.5 million ounces, while total capital expenditures are anticipated to arrive between $190 million and $210 million.
As one of the largest U.S. silver producers, management believes that Hecla is strategically poised to capitalize on the current market trends, aiming to boost its silver production to 20 million ounces by 2026.
Analysts tracking Hecla Mining expect the company's profit to reach $0.04 per share in fiscal 2024, compared to a loss in 2023, and jump 125% to $0.09 per share in fiscal 2025.
Overall, HL stock has a consensus “Strong Buy” rating. Out of the 10 analysts covering the stock, eight recommend a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining one gives a “Hold” rating.
The average analyst price target of $7.64 indicates a potential upside of 22.4% from current price levels. The Street-high price target of $10.25 suggests that HL stock could rally as much as 64.3%.
Silver Stock #3: Silvercorp Metals
Valued at $664.3 million by market cap, Canada-based Silvercorp Metals Inc. (SVM) specializes in the acquisition, exploration, development, and mining of mineral properties. Focusing on silver, gold, lead, and zinc, the company operates across key mining regions in China, including the Henan, Guangdong, and Hunan Provinces.
Shares of Silvercorp Metals have climbed 46.6% on a YTD basis, easily overshadowing the broader SPX’s return over the same time frame, as well as silver’s gains. Over the past 52 weeks, the stock is up 25.6%.
On June 27, Silvercorp paid its shareholders a semi-annual dividend of $0.0125 per share. The company’s annualized dividend of $0.03 per share translates to a 0.67% dividend yield. With a conservative 11.24% dividend payout ratio, Silvercorp maintains ample flexibility for future dividend increases.
On May 23, Silvercorp revealed its fiscal 2024 Q4 earnings results after the close, sending its stock soaring 7.3% in the subsequent trading session. While adjusted EPS of $0.02 matched estimates, revenue leaped 25% year over year to $42.7 million, sailing past projections by a solid 10.9% margin. This top-line beat was fueled by higher sales volumes and increased selling prices of gold, silver, and lead.
During the quarter, the company produced approximately 1.2 million ounces of silver, marking a 4% increase from the year-ago quarter. As of March 31, Silvercorp held $184.9 million in cash, cash equivalents, and short-term investments, alongside an equity investment portfolio valued at $112.3 million.
More recently, on July 15, the company announced its fiscal 2025 Q1 production results and sales figures. While silver production dipped slightly year over year to 1.7 million ounces, Silvercorp posted a record-breaking $72 million in revenue for Q1, marking a stellar 20% increase compared to the same quarter last year.
Analysts tracking Silvercorp project the company's profit to reach $0.28 per share in fiscal 2025, up 27.3% year over year, and jump another 17.9% to $0.33 per share in fiscal 2026.
SVM stock has a consensus “Strong Buy” rating overall. Out of the four analysts covering the stock, three suggest a “Strong Buy,” and the remaining one gives a “Moderate Buy” rating.
The average analyst price target of $5.16 indicates a healthy potential upside of 33.7% from current price levels. The Street-high price target of $6.00 suggests that SVM stock could rally as much as 55.4%.
On the date of publication, Anushka Mukherji 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.
