It’s tough to find true bargains in a time when so many stock valuations are through the roof. What’s great about mining stocks is that they combine the best of both worlds: the convenience of stock trading with the strong upside potential afforded by precious metals.
With silver, for example, you don’t have to worry about over-valuation as silver’s currently trading at a discount compared to the vast majority of stocks and other commodities. And even though silver’s trading at half-price compared to its $50 peak from 2011, the post-pandemic trend is still firmly bullish with no sign of it slowing down.
Don’t get me wrong – it makes perfect sense to own some physical silver. However, one thing that physical metals won’t get you is a dividend. History has shown that buying dividend-paying stocks, holding them for the long term, and re-investing dividends is a terrific way to build wealth over time.
In fact, some folks have become extremely wealthy through dividend investing. Warren Buffett is well known for buying and holding dividend-paying stocks. Famously, Buffett’s holding company, Berkshire Hathaway, bought millions of shares of a gold stock that pays a dividend. Could a silver stock show up next in his portfolio? Anything’s possible in these unprecedented times.
First Majestic Silver stock price. Courtesy: Yahoo Finance
But what about silver stocks that pay a dividend? There aren’t too many of those, but when you find one, it’s worth owning because now you’re getting paid in two different ways: first, from the price appreciation of the stock when silver make a big move, and second, from the consistent dividend payments.
It’s unfortunate that many companies have had to reduce their dividend payouts during the coronavirus pandemic. Some companies have even eliminated their dividends altogether. And yet, First Majestic Silver (TSX:FR, NYSE:AG) is bucking the trend with a confirmed commitment to reward the company’s loyal shareholders.
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In a watershed event for the silver-mining community, President and CEO Keith Neumeyer just announced First Majestic’s Inaugural Dividend Policy. Along with the firm fundamentals and the long-standing history of acquiring value-added silver assets at deeply discounted prices, First Majestic’s Dividend Policy provides yet another reason to be a shareholder.
Specifically, a press release just revealed that company’s Board of Directors officially adopted a policy under which the First Majestic intends to pay quarterly dividends of 1% of the company’s net revenues, starting after the completion of the first quarter of 2021.
Noting the significance of this commitment to the shareholders, Mr. Neumeyer explained that “the announcement of our inaugural dividend policy is a major milestone for the Company and validates the overall strength and sustainability of the business given our robust operations in Mexico.”
But it gets even better, as the Inaugural Dividend Policy may just be a starting point for more robust yield opportunities: “This new quarterly dividend also gives shareholders even greater leverage to silver prices as the dividend is tied to the revenues of the Company. I expect we will continue to benefit from improved profitability in the years ahead to be able to build on this initial dividend level,” Mr. Neumeyer stated.
The dividend policy will be subject to the discretion of the Board of Directors, so you’ll definitely want to check back for updates on First Majestic’s new and exciting Dividend Policy. One thing’s beyond dispute, though – for yield collectors and silver bulls, you won’t find a better deal than this.
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