Dividend-Paying Silver Mining Stocks and Funds Pull Back to Tempt Investors
By: Paul Dykewicz,
Dividend-paying silver mining stocks and funds to consider buying after a recent pullback in their prices give investors a fresh opportunity to purchase stakes in them before many experts predict they will ascend again.
Such dividend-paying silver mining stocks and funds have skyrocketed in 2020 and may resume their climb soon along with gold. The white precious metal usually surpasses the much more expensive yellow metal’s return on a percentage basis and the trend is forecast to continue beyond this year.
Silver mining share prices have soared in 2020 to outshine the technology-powered NASDAQ Composite Index and gold. With the U.S. dollar dropping in value this year, additional U.S. dollars are required to buy silver and \gold amid their rise in value.
Dividend-Paying Silver Mining Stocks and Funds Show Volatility
NASDAQ and the S&P 500 each reached new all-time records on Wednesday, Sept. 2, before they dropped 4.96% and 3.51%, respectfully, on Thursday, Sept. 3. The fallout on Sept. 3 included a 2.78% dive in the Dow Jones Industrials Average, a 2.99% plunge in the Russell 2000, a 3.15% slide in silver and a dip of 0.61% in gold.
However, year-to-date (YTD) returns through Sept. 3 show silver spiking 49.58%, the NASDAQ Composite catapulting 27.70%, gold gaining 27.16%, the S&P 500 jumping 6.94% and the Dow Jones Industrial Average dipping 0.86%. The surge in silver and gold, lifted by $6-trillion-plus in federal stimulus and Federal Reserve actions, occurred despite the pullback in their prices that provides investors with a new chance to purchase precious metals, and their related mining stocks and funds, at what may prove to be a short-term discount.
Choosing Dividend-Paying Silver Mining Stocks and Funds
After a silver and gold boom earlier in 2020, profit-taking recently occurred among some short-term investors, said Rich Checkan, president and chief operating officer of Asset Strategies International, a full-service tangible asset dealer in Rockville, Maryland. But he predicts the pullback in silver may be close to completion.
Rich Checkan, president, Asset Strategies International
Meanwhile, the value of the U.S. Dollar Index has fallen 3.9% this year through Sept, 3. The index closed on Aug. 31 at its lowest level since May 1, 2018, enduring its worst August in five years and its fourth straight month of slippage.
U.S. Dollar Affects Dividend-Paying Silver Mining Stocks and Funds
Currencies worldwide have slid against the price of silver and gold since mid-March, with the U.S. dollar having dropped more deeply in value than all but a handful of others, said Patrick Heller, communications officer at Liberty Coin Service, of Lansing, Michigan. The business is Michigan’s largest rare coin and preciousmetals dealer.
Retail customers at Liberty Coin Service’s store, just three miles from Michigan’s Capitol building, are stepping up and seeking to buy silver and gold coins, bars, ingots and rounds, Heller said. Increased media coverage about the drop in the U.S. dollar in 2020 has been a key reason, he added.
Many of those customers are first-time buyers, Heller said. Liberty Coin Service’s sales in July more than tripled June’s total, he added.
Alternative to Coins: Dividend-Paying Silver Mining Stocks and Funds
News about gold hitting record high prices, before adjusting for inflation, is helping to fuel demand from retail customers, Heller said.
“In July, our quantity of purchases from the public were still only 82% of the average per month from January 2016 through December 2019,” Heller said. “However, the average transaction size was so large that it was our second-largest total dollars spent buying from retail customers of any month since January 2016. Only August 2017 was higher in dollars spent, though on a much greater number of transactions.”
SIL Is Among Key Dividend-Paying Silver Mining Stocks and Funds
Investors have their pick of silver mining stocks and funds to consider purchasing, in addition to coins and other forms of bullion. Those who want dividend income may prefer Global X Silver Miners Fund (NYSE:SIL) as a proxy for silver.
SIL offers a trailing 12-month dividend yield of 1.13%. That income sweetens the return for investors who also have benefitted from a jump in its stock price.
Chart courtesy of www.stockcharts.com
Investing Guru Eyes Dividend-Paying Silver Mining Stocks and Funds
“For silver itself, I prefer Wheaton Precious Metals Corp. (NYSE:WPM), which is less about mining than pure silver trading,” said Hilary Kramer, national radio host of the “Millionaire Maker” program who also heads the GameChangers and Value Authority advisory services. “They know what they’re doing and pay a dividend. Rising silver prices will enhance the shareholder payout.”
Wheaton Precious Metals offers a trailing 12-month yield of 0.73% and has a consensus forward price-to-earnings ratio of 41.84. WPM’s recent pullback is reflected in its latest stock chart.
Chart courtesy of www.stockcharts.com
AAS Makes List of Dividend-Paying Silver Mining Stocks and Funds
“Probably the best stock in the space as far as relative share price performance is Pan American Silver (NASDAQ:PAAS),” said Jim Woods, who heads the Successful Investing, Intelligence Report and Bullseye Stock Trader advisory services. “That stock is outpacing 97% of all other publicly traded companies in terms of relative price strength.”
Pan American Silver offers a trailing 12-month dividend yield of 0.56% and has a forward P/E ratio of 40.40, according to Zacks. The stock’s slippage in the last month is evident in its latest chart.
Chart courtesy of www.stockcharts.com
Woods said he differentiates his stock picking from others by using relative price strength as a screening tool when he chooses recommendations for his Bullseye Stock Trader premium advisory service.
Paul Dykewicz interviews Jim Woods before COVID-19 to discuss new investment opportunities.
Dividend-Paying Silver Mining Stocks and Funds Shine for Skousen
One of the most seasoned investment forecasters who recommends silver and gold is Mark Skousen, PhD, Presidential Fellow at Chapman University, recipient of the inaugural Triple Crown in Economics in 2018 and honoree as one of the 20 most influential living economists. Skousen, who writes a monthly investment newletter called Forecasts & Strategies, recommended the purchase of Pan American Silver in his TNT Trader advisory service.
The stock recently rose 21% in two weeks, while the call options he recommended soared 101% during the same time span. To protect his gains, Skousen sets stop prices on stock recommendations in his trading services and raises them as the share prices climb to protect profits during the climb.
Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz.
Dividend-Paying Silver Mining Stocks and Funds Carry Risk
Investors can collect income and enjoy rising precious metals prices by acquiring shares in dividend-paying silver and gold mining companies, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. Investors still need to be aware that the share prices of mining companies are “far more volatile” than those of gold and silver themselves, he added.
Carlson, who also heads the Retirement Watch advisory service, advised remembering that dividend-paying silver and gold mining company shares are affected by far more than the price of precious metals. Such factors include a company’s debt level, management skill, labor relations and COVID-19 risks.
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an pre-COVID 19 interview.
Trade Sees Value in Dividend-Paying Silver Mining Stocks and Funds
Paul Dykewicz interviews Bryan Perry at a MoneyShow conference.
“The price of silver has rallied back to pre-coronavirus levels under the influence of two driving forces,” Perry said. “The first is the tidal wave of liquidity pouring into the global financial system brought on by central bank stimulus. At its core, fiscal stimulus eats away the purchasing power of fiat currencies, making precious metals an attractive hedge and investment.
“Stability in copper prices recently has speculators interpreting that broad commodity price inflation might be brewing, which also would bode well for putting upside pressure on silver that is used in several manufacturing subsectors. Silver is considered the poor man’s precious metal but has a history of catching fire and making sudden sharp moves higher to catch up with gold. Owning CEF offers the best of both metals in one ETF and in physical form.”
It recently traded at a discount to its net asset value (NAV) of 1.96%, after a recent rise in its share price, while its three-year average discount to its NAV is a larger 2.91%. However, CEF does not pay a dividend.
Chart courtesy of www.stockcharts.com
CEF’s assets under management rose to $17 billion on Aug. 4, up 22% since June 30, company officials said. Its net income rose 18.0% to $10.5 million, or 43 cents per share, for second-quarter 2020, compared to $8.9 million for the same quarter last year.
COVID-19 Affects Dividend-Paying Silver Mining Stocks and Funds
The global COVID-19 pandemic has inflicted a heavy human toll. As of Sept. 4, 26,310,505 cases and 868,810 deaths have occurred worldwide, as well as 6,150,998 cases and 186,797 deaths in the United States. America has been forced to confront the brutal reality of incurring the most cases and deaths by far of any country, including China, where COVID-19 began.
With the U.S. economy reopening state-by-state and in the District of Columbia, investors have had a chance to benefit since March from the rise of silver, gold and the broad stock market. With the NASDAQ Composite and S&P 500 setting new highs after the stock market crash in March and more than $6 trillion in federal stimulus raising the likelihood of inflation, the prospects for silver are brightening.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.