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What are we looking for?

Ways to tap the surging price for silver – while earning a sustainable dividend.

The screen

Economic uncertainty owing to COVID-19 and the prospects of rising inflation from massive government spending are helping spur gold to new highs. Earlier this month it rose above US$2,000 an ounce for the first time ever (though it’s dipped below that threshold since). Silver, the more affordable precious metal, or “poor man’s gold,” was slower to climb. Still, it’s now up more than 132 per cent since mid-March and trades just above US$27 an ounce.

With its myriad industrial uses, silver will also benefit from an economic rebound.

From a list of silver stocks, we identified leaders that pay dividends. (Note that the sharp rise for silver stocks means yields are down despite healthy dividend payments.) 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. Hecla Mining Co. has silver mines in the United States and Mexico, plus a gold mine in Quebec. Pan American Silver Corp. is focused on Mexico and South America. Incorporated in Britain and headquartered in Mexico, Fresnillo PLC is one of the world’s biggest silver producers with major silver-gold mines in Mexico. Silvercorp Metals Inc. is a Canadian mining company and the predominant silver producer in China. And finally, Wheaton Precious Metals Corp. is one of the world’s biggest precious-metals streaming companies. Its royalties include those from silver mines worldwide.

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

Select dividend-paying silver stocks

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)**1Y Ttl. Rtn. (%)Recent Price ($)**
1Wheaton Precious MetalsWPM-TAverage60.831.293.968.12
2Fresnillo PLC (ADR)FNLPF-OTCAverage60.312.3111.316.50
3Pan American Silver Corp.PAAS-QAverage50.67.3108.033.82
4Silvercorp Metals Inc.SVM-TAverage40.31.8111.410.23
5Hecla Mining Co. HL-NAverage40.23.3287.55.89

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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