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What are we looking for?

Copper stocks set to tap future economic growth – while offering sustainable dividends.

The screen

Copper prices have rebounded strongly since their March lows and are now at their highest levels since 2018.

Investors anticipate rising copper use as a global economic rebound spurs construction and demand for electrical components and wiring. What’s more, copper miners will profit from expanding demand for electric-powered cars. They use large amounts of copper in their batteries and electric motors.

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In fact, electric cars contain about 80 per cent more copper than gasoline-powered vehicles. On top of that, power utilities will need new copper transmission lines as electric car owners plug their vehicles into the power grid.

From a list of copper stocks we identified leaders that pay dividends. We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is a leader in its industry.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated five stocks. Teck Resources Ltd., headquartered in Vancouver, gets a big part of its revenue from copper, with the rest mostly coming from steelmaking coal and zinc. Anglo-Australian mining giants Rio Tinto PLC and BHP Group Ltd. are both major global producers of copper. Mexico’s Southern Copper Corp. mines the red metal in Mexico and Peru. Toronto-based Lundin Mining Corp. extracts both copper and zinc worldwide.

We advise investors to do additional research on any investments we identify here.

Select dividend-paying copper stocks

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.) **1Y Ttl. Rtn. (%)Recent price ($)**
1Rio Tinto PLC (ADR)RIO-NAverage65.076.217.961.00
2BHP Group Ltd. (ADR)BHP-NAverage64.276.36.851.92
3Southern Copper Corp.SCCO-NAverage63.336.636.347.56
4Teck Resources Ltd.TECK.B-TAverage51.19.3-17.818.21
5Lundin Mining Corp.LUN-TAverage42.15.612.37.66

Source: Dividend Advisor. 

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements. **Share price and market cap are in native currency.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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