The commodities space is a difficult one to invest in for many investors. Commodities producers are, by default, held hostage to the prices of the underlying commodities they produce. Therefore, investing in a particular miner or producer requires a belief that the commodity price environment will stay stable, or improve, over time. This is a difficult task, to make this assertion.
That said, one company producing copper and other base metals I’ve been bullish on lately is Lundin Mining (TSX:LUN). This miner focuses primarily on copper, but also on other base metals such as zinc, producing what are commonly referred to as industrial metals. These commodities tend to outperform with improved long-term growth projections. Accordingly, these commodities are now trading at or near multi-year highs, with analyst expectations continuing to come in bullish for continued commodity price improvement in these sectors.
Lundin’s ability to generate higher cash flows has allowed this company to improve its balance sheet. This also paves the way for speculation that continued dividend increases could be on the horizon. This is a dividend growth speculative play, given the company’s dividend yield has traded around 1.4% of late.
This is not a stock that will provide portfolio-enhancing returns, but does fall in that category of potential dividend growers that could provide substantial dividends a few years down the road, if everything goes well. If you’re bullish on copper and base metals, and believe in the runway for dividend growth, Lundin Mining is an interesting stock in this environment.
Invest wisely, my friends.
