WPM:CC - The Best Gold Stock to Invest $1000 in Right Now
2024-06-28 20:45:00 ET
Have you invested in precious metal stocks? In case you haven’t noticed, gold prices have surged this year, and pundits see that trend continuing. Here’s the best gold stock you should consider buying right now.
Not all gold stocks are created equally
Before mining activities kick off, traditional miners are tasked with a few costly and time-consuming tasks. This includes identifying potential sites and making the necessary procurements to begin extracting metals from the mine.
What if there was a gold stock that didn’t require you to worry about any of those activities?
Enter Wheaton Precious Metals ( TSX:WPM ), which is one of, if not the best gold stock to invest in right now.
Wheaton is what is known as a precious metals streamer. Streamers differ from their traditional mining peers in that they do not own any mines. Additionally, they don’t handle any of the day-to-day management of the mine.
Instead, streamers are responsible for providing upfront capital to traditional miners. It is the traditional miner who in turn sets up the mine and begins operations.
In exchange for that financial injection, Wheaton is allowed to purchase metals produced by the mine at a considerable discount. Keep in mind that the discounted number is well below market rates. As of the time of writing, silver trades near US$30 per ounce, while gold is just over US$2330 per ounce.
Wheaton can then proceed to sell those metals at the going market rate. By way of comparison, the market rate for silver is just shy of US$30 per ounce, while gold trades at just over US$2330 per ounce.
Wheaton offers more than traditional miners
Another key advantage over traditional miners is that streamers like Wheaton can quickly move on to the next candidate mine, irrespective of what traditional miner owns it. In other words, Wheaton leaves the day-to-day management of the mine to the traditional miner.
This is part of the reason why Wheaton boasts a whopping 18 operating mines and another 26 projects in various stages of development.
By extension, this also means that streamers like Wheaton are considerably lower-risk options over traditional miners. While that may seem like reason enough to buy Wheaton as the best gold stock option, there are a few more key points to consider.
Unlike traditional miners that are straddled with considerable costs and debt, Wheaton has no debt and $306 million in cash as of the most recent quarter. During that quarter, the company earned $164 million on an adjusted basis on revenue of $297 million.
And that’s not even the best part.
The existing and in-development projects mentioned above are expected to drive production up considerably over the next five years. Wheaton expects to realize a whopping 40% bump in production, stemming primarily from those existing facilities.
Wheaton’s impressive growth is just half the story. The other piece that prospective investors should take into consideration is the streamer’s quarterly dividend.
As of the time of writing, Wheaton offers a respectable yield of 1.2%. While that’s not the highest yield on the market, it is covered and significantly lower risk when compared to traditional miners.
Invest in the best gold stock today
Wheaton offers investors a growing dividend, solid growth and a reliable, lower-risk business model. This makes it a great fit for investors looking at precious metals stocks.
In my opinion, Wheaton should form a small part of any larger, well-diversified portfolio .
Buy it, hold it, and watch it grow.
The post The Best Gold Stock to Invest $1,000 in Right Now appeared first on The Motley Fool Canada .
Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024