Three Dividend-paying Uranium Investments to Purchase as Federal Funding for Infrastructure Improvements Increases
By: Paul Dykewicz,
Three dividend-paying uranium investments to purchase amid soaring government support for infrastructure funding offer ways to obtain increased income and share price gains during the ongoing pandemic.
The three dividend-paying uranium investments to purchase are viewed less skeptically by government leaders and environmentalists now than in the past when worldwide publicity of nuclear power mishaps and contamination raised public outcry about potential health consequences. Since then, uranium has achieved a public relations makeover with improved technology and the help of its advocates who call it a “clean energy” alternative to pollution-plagued fossil fuels such as coal.
As a result, U.S. lawmakers and policymakers are looking toward uranium-powered nuclear energy to reduce dependence on fossil fuels that critics of coal claim contribute to global warming. For the first time in the past 48 years, the Democratic Party is supporting nuclear energy with the goal of helping the country produce electricity by 2035 that is 100% free of carbon emissions.
In a 69-30 vote, the Senate passed a $1.1 trillion bipartisan infrastructure bill on Aug. 10 that included $550 billion in new spending, with $73 billion for electricity grid modernization and $7.5 billion to build electric vehicle (EV) charging stations. That bill is expected to win approval in the Democratic-controlled House once the representatives return from recess on Aug. 23. A $3.5 trillion budget reconciliation bill, offering a nuclear-friendly clean electricity payment program, a clean energy technology accelerator, consumer rebates for electrification and clean energy tax credits, squeaked through the Senate on Aug. 11 in a 50-49 vote in which all the chamber’s Democrats and the two Independents who side with the party favored it and all the Republicans who voted rejected it.
Three Dividend-paying Uranium Investments to Purchase Propelled by Praise from U.S. Secretary of Energy
“Nuclear power is clean, and it is safe,” Secretary of Energy Jennifer Granholm, told Iowa Public Radio during a July 29 interview. “It currently provides 55% of the clean energy that we use in this country. We want to support the existing fleet.”
However, additional investment is needed in technology to create the “next generation of nuclear,” using small modular reactors, Granholm continued. If a “clean energy standard” is included in the final version of $3.5 trillion reconciliation bill that the House will seek to pass, many issues related to the fiscal challenges that some of the nuclear plants have incurred will go away because they will be addressed in the legislation, she added.
The United States has announced a goal to cut up to 52% of its greenhouse gas emissions by 2030. At the same time, the global demand for nuclear power is rising, as more countries are committing to net-zero carbon goals.
Scott Melbye, president and chief executive officer of Canada’s Uranium Royalty Corp. (NASDAQ:UROY), of Vancouver, B.C., and executive vice president of Corpus Christi, Texas-based Uranium Energy Corp. (NYSE:UEC), told me at the recent FreedomFest conference that lawmakers responded favorably when he testified on March 25 before the Senate Energy and Natural Resources Committee. That full committee hearing focused on ways to maintain and to expand the use of nuclear energy in the United States and abroad.
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Cameco Headlines Three Dividend-paying Uranium Investments to Purchase
Aside from UROY and UEC, Melbye said he recommends the stocks of his former employer, dividend-paying Cameco (NYSE:CCJ), a Canadian uranium company in Saskatoon, Saskatchewan, as well as non-dividend-paying, development-stage uranium miners NexGen Energy Ltd. (NYSEAmerican:NXE), of Vancouver, Canada, and Toronto’s Denison Mines Corp. (NYSEAmerican:DNN). Cameco is one of the world’s largest providers of uranium, a heavy, silvery-grey metal, and has 455 million pounds of proven and probable reserves, offering sufficient capacity to produce more than 53 million pounds of uranium concentrate annually.
Utilities around the world depend on uranium to generate reliable and carbon-free energy. Plus, more than a decade has passed since the Fukushima disaster in Japan on March 11, 2011, when the Tōhoku earthquake and tsunami caused the most severe nuclear accident since the Chernobyl accident on April 26, 1986. The latter incident released massive amounts of radioactive material into the environment when a sudden surge of power during a reactor-systems test destroyed Unit 4 of the nuclear power station at Chernobyl, Ukraine, then part of the Communist-led Soviet Union.
Nuclear represents about 10% of annual worldwide electricity generation. With climate concerns on the rise, demand for nuclear power should grow, especially given the new class of nuclear reactors available — from companies like privately held TerraPower, backed by billionaire Bill Gates — that have more reliable cooling systems than those of the past.
Three Dividend-paying Uranium Investments to Purchase Positioned to Profit from Doubling of Prices
“Over the past five years, uranium prices have appreciated to the point where they have nearly doubled,” said Rich Checkan, president and chief operating officer of Rockville, Maryland-based Asset Strategies International, a full-service tangible asset dealer. “This is no doubt a result of a strong push by the current administration away from coal and other fossil fuels and toward cleaner green initiatives.”
Rich Checkan, Asset Strategies International
However, uranium prices are still less than half their 2016 highs and less than one-third of their 2011 peak. Many observers believe this bodes well for uranium miners and those who invest in them, Checkan told me.
Multi-Year Contracts with Utilities Help Fuel Three Dividend-paying Uranium Investments to Purchase
“The thing that’s important to note about uranium mining companies is that they operate on multi-year supply contracts with utilities,” said Jim Woods, editor of Successful Investing, Intelligence Report and Bullseye Stock Trader. “That means a steady stream of revenue from nuclear power plants.”
Woods added that global demand for traditional and non-traditional uses of nuclear power continues to grow as the world moves toward increasing electrification of vehicles, among other products, and away from traditional fossil fuel sources to produce that electricity.
Columnist Paul Dykewicz meets with Jim Woods to discuss the best stocks to buy.
Billionaire Bill Gates-Backed TerraPower Boosts Three Dividend-paying Uranium Investments to Purchase
Microsoft founder Bill Gates calls nuclear “the safest form of power generation when analyzed by deaths per unit of electricity generated.” Gates and the other founders of TerraPower envision clean and advanced nuclear energy as the pathway to meet growing electricity needs, to mitigate climate change and to lift billions of people out of poverty.
In addition, Barron’s recently wrote, “Looking ahead, global uranium demand is set to outpace production.”
Cameco is a good way to purse the opportunity with uranium, said Mark Skousen, editor of the Forecasts & Strategies newsletter, during the recent FreedomFest conference that he organized. The company’s sales and earnings have dipped recently but could be about to reverse, he added.
Mark Skousen, a descendent of Ben Franklin, meets with investment columnist and author Paul Dykewicz.
Skousen, who also heads the Home Run Trader, Five Star Trader, TNT Trader and the Fast Money Alert advisory services, recently forecast that Cameco’s earnings per share will nearly quadruple from $0.19 this year to approximately $0.75 in 2022. Plus, Cameco has “manageable debt” and more than $1 billion in cash on hand, Skousen added.
“By the time most investors realize that nuclear demand is growing, shares of Cameco will be trading substantially higher,” Skousen predicted.
Energy Sector, With Three Dividend-paying Uranium Investments to Purchase, Powered Past Market by 10.6% in the Last Year
Cameco has outperformed the S&P 500 by 34.2% and its sector by 23.6% in the past year, according to Stock Rover, an investment data website that offers a free trial by clicking here. The Energy sector overall has beaten the market by 10.6% in the past year.
Chart courtesy of www.StockCharts.com
T. Rowe Price Mid Cap Value Fund Rates as One of Three Dividend-paying Uranium Investments to Purchase
The largest holder of Cameco shares is a dividend-paying mutual fund, T Rowe Price Mid Cap Value Fund (TRMCX). The fund, which lists Cameco as its 14th biggest position valued of $224,410,527, invests at least 80% of its portfolio in companies whose market capitalization falls within the range of those in the S&P MidCap 400 Index or the Russell Midcap Value Index. TRMCX focuses on stocks with attractive operating margins, sound balance sheets and stock ownership by management, so owning a 3.17% stake in the uranium miner is a reflection of much more than simply Cameco’s industry.
With $14.8 billion in assets under management and a modest 0.9% dividend yield, the T Rowe Price Mid Cap Value Fund is rated 4 out of 5 stars by Morningstar. Plus, the fund has produced a total return of 50.64% in the past year. On an annualized basis, the fund is up 10.81% for the past three years and 11.93% for the past five years.
The fund’s ninth largest holding is Franco-Nevada Corporation (NYSE: FNV) is a Toronto, Ontario, Canada-based company that owns royalties and streams in gold mining and other commodity and natural resource investments. Canadian Natural Resources (NYSE:CNQ) a Calgary, Alberta-based company engaged in hydrocarbon exploration primarily in Western Canada, the United Kingdom sector of the North Sea and offshore Côte d’Ivoire and Gabon, is the fund’s 24th biggest position. Freeport-McMoRan (NYSE: FCX), a Phoenix, Arizona-based mining company that holds significant proven and probable reserves of copper, gold and molybdenum, is the 31st largest holding of TRMCX.
Global X Uranium ETF Rounds out Three Dividend-paying Uranium Investments to Purchase
Global X Uranium ETF (URA), the last of the three dividend-paying uranium investments to purchase, provides its shareholders access to a range of companies involved in mining the mineral and in producing nuclear components, including activities such as extraction, refining, exploration, or manufacturing of equipment. The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Uranium & Nuclear Components Total Return Index.
The fund’s focus on uranium fired up its gains during the past year to reach 98.03%, just under the 98.76% rise in the Solactive Global Uranium Total Return Index that it aims to track. URA’s average annual performance of 19.55%, 11.49% and -9.50% for the past three years, five years and 10 years, respectively, slightly trailed the index for each period.
In a single investment, URA offers access to a basket of companies involved in mining uranium and producing nuclear components. Cameco accounts for 22.61% of the fund’s portfolio and is by far URA’s largest position.
Uranium Energy Corp. Is a Non-Dividend-paying Alternative to the Three Dividend-paying Uranium Investments to Purchase
An American provider of uranium is Uranium Energy Corp., which has more than $123 million in cash, equity and physical holdings. The company boasts of preparing for production with its licensed, low-cost In-Situ Recovery (ISR) mining in Texas and Wyoming.
Uranium Energy Corp., the eighth largest holding of Global X Uranium ETF, has powerful financial backers that include its management team, BlackRock Inc. (NYSE:BLK), Vanguard Group, State Street (NYSE:STT), Fidelity, Northern Trust (NASDAQ:NTRS), UBS Group AG (NYSE:UBS), CEF Holdings, KCR Fund and Global X Management. UEC also is undertaking the largest pre-construction ISR uranium project in the United States. Plus, the company received a modified Permit to Construct in 2019 at a key site in Power River Basin, Wyoming.
UEC recently reported working capital of $64.2 million, including cash and cash equivalents of $43.9 million, term deposits of $4 million and uranium inventory holdings of $26.2 million. The company’s management projects that its existing cash resources and, if needed, cash generated from selling current assets, will provide sufficient funds to fulfill its uranium inventory purchase commitments, repay $10 million in principal debt when it is due and carry out planned operations for the next 12 months, according to its 10Q for the three months ended April 30.
However, investing in UEC carries risk. The company reported in the same 10Q that continuing as a “going concern” beyond the next 12 months after April 30, 2021, would depend on obtaining adequate additional financing, since its operations are capital intensive and future capital expenditures are expected to be substantial.
“Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations, and this reliance is expected to continue for the foreseeable future,” according to the 10Q. “Our continued operations, including the recoverability of the carrying values of our assets, are dependent ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations.”
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Uranium Royalty Corp. Is Another Alternative to Three Dividend-paying Uranium Investments to Purchase
Those interested in helping to finance uranium miners without facing the risk of variable operating costs, continuing capital expenses and other increasing expenses may like the business model of Uranium Royalty Corp. Royalty companies such as this one provide up-front financing to mine operators in return for royalties on whatever the project produces or the rights to a stream an “agreed-upon” amount of uranium at a pre-set price that ideally can be sold to others later at a significantly higher price.
Source: Uranium Royalty Corp.
Royalty companies also are positioned to benefit from a growing deficit between primary production and reactor requirements. Plus, UROY is the first company to apply the royalty and streaming business model exclusively to the uranium sector.
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The company’s 4.6% stake in Yellow Cake plc gives UROY ownership interests in physical uranium that its management said was acquired at cyclical lows. Plus, its portfolio includes interests in 16 development, advanced and permitted uranium projects in multiple jurisdictions, including the McArthur River and Cigar Lake mines.
Source: Uranium Royalty Corp.
Three Dividend-paying Uranium Investments to Purchase Omit Non-Dividend-paying NexGen Energy Ltd.
NexGen Energy Ltd., the third largest uranium position held by Global X Uranium ETF, announced on July 26 that it began field programs focused on detailed geotechnical site confirmation studies and regional exploration drilling at its 100% owned Rook I property in Athabasca Basin, Saskatchewan. The Rook I property hosts numerous electromagnetic (EM) conductors and structural corridors that have yet to be explored but have been found in the Arrow Deposit during the last several years.
The targeted, high priority areas lie within a 10 km. radius of Arrow Deposit within the Patterson Lake Corridor. The holdings also include the Derkson Corridor that is directly parallel and to the east of the Patterson Corridor, which hosts the Arrow Deposit.
Leigh Curyer, NexGen Energy’s chief executive officer, said that the recommencement of field activities to advance the Rook I Project through final engineering and permitting is an exciting time for company. The NexGen group has a “tremendous track record” of discovery and the geological team has been looking forward to resuming exploration drilling on what may be most prospective land package globally, he added.
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Three Dividend-paying Uranium Investments to Purchase Forgo Non-Dividend-paying But Promising Denison Mines
Denison Mines Corp., the fifth biggest uranium position held by Global X Uranium ETF, is an exploration, development and production company founded by Stephen Roman and known for its uranium mining in Blind River and Elliot Lake within the Province of Ontario, Canada. The company in recent years has diversified into coal, potash and other projects.
“We have had several significant news developments at Denison over the last few weeks, and since the beginning of 2021,” said David Cates, president and chief executive officer of Denison Mines.
Raymond James is among the brokerage firms that have been tracking Denison’s purchase of physical uranium since early this year, the miner’s field testing at its flagship Wheeler River project and its closing the acquisition of 50% of JCU (Canada) Exploration Company, Limited (JCU) from UEX Corporation for cash consideration of $20.5 million to boost its ownership of Wheeler River to 95%.
The Wheeler River project includes the Phoenix deposit, which is one of the highest-grade ones in the world, according to a recent research note from Raymond James. Denison also offers a diversified revenue stream, while exploration and development activities at Wheeler progress.
Denison gives investors good exposure to uranium through various assets, Raymond James wrote.
The investment firm placed a price target of $1.80 on Denison, based on a 1.0x multiple (generally in-line with the base metal and uranium universe). If the price target is reached, it would mark a 65.1% jump from the stock’s closing price of $1.09 on Aug. 13.
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Delta Variant of COVID-19 Adds Negatively on Markets Right Now
The highly transmissible Delta variant of COVID-19 is spurring warnings from health experts and elected officials about a new surge in cases across the United States and elsewhere. The variant has reached at least 117 countries so far and is increasing the number of new cases and deaths after significant slowdowns in each as vaccination rates rose dramatically in recent months, according to the Centers for Disease Control and Prevention (CDC).
The Delta variant has emerged as the dominant coronavirus strain in the United States, according to the CDC. With just slightly more than half the U.S. population fully vaccinated, public health officials express concern that a further resurgence of COVID-19 cases may occur in the fall when many unvaccinated children return to school.
Gains in increasing the number of people vaccinated from COVID-19 raise hope that new cases and deaths turn down again in the weeks ahead. As of Aug. 13, 196,505,543 people, or 59.2% of the U.S. population, have received at least one dose of a COVID-19 vaccine. The fully vaccinated total 167,354,729 people, or 50.4%, of the U.S. population, according to the CDC.
COVID-19 cases worldwide have reached 205,661,815 and caused 4,338,815 deaths, as of Aug. 13, according to Johns Hopkins University. U.S. COVID-19 cases reached 36,307,177 and caused 619,094 deaths. America has the unfortunate distinction as the country with the most COVID-19 cases and deaths.
The three dividend-paying uranium investments to purchase should benefit greatly from the relatively new perception that nuclear power is a safe source of clean energy. Criticism from environmentalists and certain lawmakers who insist that fossil fuels are contributing substantially to global warming and adverse climate change could put governments on a course of catering to uranium miners with favorable regulation and legislation for years into the future.
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 great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for special pricing!