Updated on September 28th, 2022 by Bob Ciura
Silver stocks operate in a highly cyclical industry. Profits for mining companies are reliant on high precious metals prices. During times of rising precious metals prices, this results in a massive windfall.
But the opposite is also true–lower precious metals prices can cause mining companies to post losses. As a result, income investors looking for stable cash flow and reliable dividends need to tread carefully.
With this in mind, we created a list of silver stocks with important financial ratios such as price-to-earnings ratios and dividend payout ratios.
You can download our full list of silver stocks by clicking on the link below:
In addition to the Excel spreadsheet above, this article covers our top 5 silver stocks today. The companies analyzed primarily focus on silver, but are also engaged in mining of other metals such as gold or zinc.
We rank these 5 companies by a qualitative combination of asset quality, balance sheet strength, future growth prospects, and dividend safety.
Table of Contents
- Silver Stock #5: Glencore plc (GLCNF)
- Silver Stock #4: Pan American Silver Corporation (PAAS)
- Silver Stock #3: Hecla Mining Company (HL)
- Silver Stock #2: Fresnillo Plc (FNLPF)
- Silver Stock #1: Wheaton Precious Metals (WPM)
Silver Stock #5: Glencore plc (GLCNF)
Glencore was founded in 1974 and is one of the leading companies in the mining sector. Glencore plc was the result of merging Glencore with Xstrata in 2013. The company smelts, refines, mines, processes and stores silver, copper, zinc, aluminum, nickel, cobalt, iron ore and other metals.
Glencore, which is the largest company in Switzerland, also has an energy and agricultural products segment. This makes the company the most diversified on this list. Diversification is especially valuable when considering silver stocks, considering the volatility of precious metals prices.
You can see an overview of Glencore’s 2022 first-half performance in the image below:
Source: Investor Presentation
With a market cap of $66 billion, Glencore is a large cap stock.
While silver is the company’s largest metal produced, Glencore is also a leader in several other areas. Glencore is a global leader in the production of copper, cobalt, zinc, nickel and seaborne energy coal.
Glencore is the largest name in its sector, which should fuel continued growth in the years ahead. We also find the diversified business model away from precious metals to be attractive as well.
Glencore pays a semi-annual dividend payout of US$0.13 per share. In addition, in August the company declared a supplemental payout of $0.11 per share. In total, the stock yields ~5%, making Glencore a high dividend stock.
Silver Stock #4: Pan American Silver Corporation (PAAS)
Pan American Silver Corporation explores, acquires, develops and refines silver produced from its mines. The company has a market cap of $5 billion.
The company has operations in both North and South America.
Source: Investor Presentation
Pan American operates silver mines in the U.S., Canada, Peru, Mexico and Argentina. The company has used acquisitions to help fuel future growth, for example acquiring Canadian precious metal mining company Tahoe Resources in 2019.
The company generates approximately more than half of its revenue from gold, more than a quarter from silver, and the remainder from copper, zinc, and lead.
Pan American is a strong cash flow generator, with over $1.6 billion in free cash flow generated since 2010. With its free cash flow, the company invests in growth, pays its debt, and returns cash to shareholders.
Pan American has paid a dividend every year since 2008, though the company cut its dividend in both 2015 and 2016. Over the last three years, however, Pan American’s dividend has grown at a high rate.
The company has a unique dividend policy, which is to pay a base dividend of $0.10 per common share each quarter with a variable dividend, paid quarterly, that is linked to the net cash on the balance sheet for the previous quarter. Pan American has a current yield of 2.7%.
Silver Stock #3: Hecla Mining Company (HL)
Hecla Mining Company has been in business since 1891. The company, along with its subsidiaries, develops, produces, markets and explores for both precious and base metals around the world.
The company sells unrefined gold and silver to traders in the precious metal markets. Hecla also provides lead, zinc and bulk concentrates to smelters. Hecla has interests in Alaska, Colorado, Idaho, Montana, Canada, and Mexico.
According to Hecla, it produces over 40% of U.S. silver.
Source: Investor Presentation
Hecla’s business performance is at the mercy of the markets for its precious and base metals. The company does have some advantages. First, Hecla is the largest silver producer in the U.S. and the third largest producer of lead and zinc.
The company also focuses on mines with a long reserve life. Its core properties have an estimated reserve life of between 11 and 15 years.
Hecla pays a quarterly dividend of $0.0075 per share, for a current yield of 0.7%.
Hecla maintains a bullish long-term view of silver, due largely to favorable supply-and-demand economic factors. The company believes that by 2030, silver demand will reach more than 1,100 million ounces if demand stays on the current trend. This compares to 2019 supply of 1,023 million ounces and demand of 1,074 million ounces.
Therefore, the supply-demand imbalance will require additional supply in order to meet projected demand. This could lead to promising long-term growth for Hecla.
Silver Stock #2: Fresnillo Plc (FNLPF)
Fresnillo is the world’s leading producer of silver and the largest producer of gold in Mexico. The company’s shares are listed on the London stock exchange. Besides silver and gold, Fresnillo explores for lead and zinc concentrates.
The company also leases mining equipment, supplies semi-pure alloys of gold and silver and provides administrative services. Fresnillo has a market capitalization of $5.6 billion.
Fresnillo is a diversified company.
Source:Investor Presentation
Like many companies on this list, Fresnillo has experienced wide variance in earnings results. The company has produced a loss several times over the last decade.
Fresnillo’s policy is to pay out 33% to 50% of profit after tax in the form of dividends. The company pays out one-third of the dividend in September while the remaining two-thirds of the dividend is paid in June.
Because profit changes from year-to-year and currency exchange impacts what amount U.S. investors are paid, the dividend has varied over the years. Investors should note that the company has paid a dividend for at least 10 consecutive years, the longest streak of any company on this list.
Based on the trailing two semi-annual payments, the stock yields 3.5%, which is relatively high among silver stocks. This makes Fresnillo an appealing pick within the silver stocks, especially for investors looking for higher income.
Silver Stock #1: Wheaton Precious Metals (WPM)
Formerly known as Wheaton Silver, Wheaton Precious Metals was started in 1994. The company has a market capitalization of $18 billion.
Wheaton is the largest metal streaming company in the world. Streaming means that the company purchases the right to buy silver and gold at a low fixed cost instead of outright mine ownership. It has 24 operating mines and another 8 development projects around the world.
Source: Investor Presentation
Wheaton’s earnings-per-share performance has been quite volatile over the last decade. Due to its business model, Wheaton doesn’t control how much gold or silver is mined from a specific location nor does the company have control over the market prices for the precious metals.
Related: The Top 7 Gold Stocks Now.
Wheaton reported second quarter earnings on August 11th, 2022, and results were better than expected on both the top and bottom lines. The company reported adjusted earnings-per-share of 33 cents, which was a penny better than expected. Revenue came to $303 million, which was down 8.3% year-over-year, but beat estimates by $6.4 million. The revenue decline was due to a 5% decline in the average realized gold equivalent price, and a 3% decline in the number of gold equivalent units sold.
Average cash costs were $440 per GEO, compared to $444 in the second quarter a year ago. Cash operating margin was $1,338 per GEO sold, a decline of 6% year-over-year. The company ended the quarter with $449 million in cash on hand. The company also extended its undrawn $2 billion revolving term loan out to 2027, so liquidity is outstanding.
Click here to download our most recent Sure Analysis report on WPM (preview of page 1 of 3 shown below):
Final Thoughts
Investing in silver stocks is best left to those with higher risk tolerances. The companies on this list have each struggled during various portions of the past decade. Some companies have rarely recorded a profit from year to year.
Moreover, many silver stocks do not pay dividends, and even those that do cannot be counted on to maintain their dividends during a recession, or during periods of declining silver prices.
That said, if investors are interested in silver stocks, we believe that Fresnillo and Wheaton Precious Metals are the best options.
Further Reading
If you are interested in finding high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:
- The Dividend Aristocrats List: a group of elite S&P 500 stocks with 25+ years of consecutive dividend increases.
- The Highest Yielding Dividend Aristocrats: the 20 Dividend Aristocrats with the highest dividend yields right now.
- The Dividend Champions List: a broader group of stocks with 25+ years of consecutive dividend increases, without the S&P 500 Index inclusion requirement.
- The Dividend Challengers List: stocks with 5-9 years of consecutive dividend increases.
- The Dividend Achievers List: a group of stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings List: considered to be the best-of-the-best among dividend growth stocks, the Dividend Kings are a group of exceptional dividend stocks with 50+ years of consecutive dividend increases.
- The Blue Chip Stocks List: contains stocks on either the Dividend Achievers, Dividend Aristocrats, or Dividend Kings list.
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The 2022 High ROIC Stocks List: The top 10 stocks with high returns on invested capital.