10 Reasons to Invest in Silver Wheaton

This precious metals streaming company builds growth via its portfolio of low-cost and long-life assets.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Silver Wheaton’s (TSX: SLW)(NYSE: SLW) precious metals streaming model enables it to buy the silver or gold production of a mine it doesn’t own or operate in exchange for an upfront payment. Here are 10 reasons to consider Silver Wheaton.

1. Its agreements

Silver Wheaton’s family of assets include precious metal streams on Goldcorp’s (TSX: G)(NYSE: GG) Penasquito mine and HudBay Minerals’ (TSX: HBM)(NYSE: HBM) flagship 777 mine and Constancia project. It also includes Barrick’s (TSX: ABX)(NYSE: ABX) Pascua-Lama Project and Vale’s (NYSE: VALE) Salobo and Sudbury mines.

2. Its major streams

In 2013, the company’s cornerstone assets included the San Dimas and Penasquito mines. Primero Mining’s (TSX: P) (NYSE: PPP) San Dimas mine contributed 6.5 million ounces to Silver Wheaton in 2013. Goldcorp’s Penasquito mine produced more than 6.2 million ounces of silver for Silver Wheaton in 2013.

3. Its track record

The company had a record year in 2013. Its production and sales volumes increased 22% and 10%, respectively. Its attributable production increased for the fifth consecutive year, to 35.8 million silver equivalent ounces.

4. Its Q1 2014 production

Silver Wheaton had attributable silver equivalent production for Q1 2014 of 9 million ounces (6.9 million ounces of silver and 33,800 ounces of gold). This represents an increase of 8% over Q1 2013.

5. A first-rate portfolio

Silver Wheaton has the right to purchase all or a portion of the precious metals production from a high-quality portfolio at a low fixed cost. This portfolio consists of 19 operating mines and five development projects. In 2013, Silver Wheaton entered into an agreement with Vale to acquire 25% of the gold produced from its Salobo mine for the life of the mine, and 70% of gold production from some of Vale’s Sudbury mines for a term of 20 years.

6. Geographic diversity

The company’s geographic breakdown of attributable silver and gold reserves and resources, as of December 31, 2013, included Canada, the U.S., Mexico, Sweden, Portugal, Guyana, Brazil, Greece, Chile, Argentina, and Peru.

7. Its capital and operating cost certainty

Silver Wheaton has no ongoing capital or exploration costs. It does not contribute to future capital expenditures or exploration costs invested by a mine. However, Silver Wheaton profits from the production and exploration growth that results from these expenditures.

8. Its top management

President and CEO Randy Smallwood is a founding member of Silver Wheaton. He originally began as an exploration geologist with Wheaton River Minerals Ltd. He has a geological engineering degree from the University of British Columbia and was an important part of the team that built Wheaton River/Goldcorp into one of the largest and most profitable gold companies globally.

9. Its forecast

Its 2014 forecast attributable production is roughly 36 million silver equivalent ounces. This includes 155,000 ounces of gold. By 2018, the expectation is that annual attributable production will grow to approximately 48 million silver equivalent ounces. This includes 250,000 ounces of gold.

10. Dividends

Last month, the company declared a quarterly dividend of $0.07 per common share. Its current dividend yield is 1.24%.

Consider Silver Wheaton as a way to add silver and gold to your portfolio via the company’s various streams. Its business paradigm can create steady returns for you.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini has no positions in any of the companies mentioned in this article. Silver Wheaton is a recommendation of Stock Advisor Canada.

More on Investing

Profit dial turned up to maximum
Tech Stocks

$1,000 Invested in Constellation Software Stock Would Be Worth This Much Today

Constellation Software (TSX:CSU) is trading above $2,000 today. Why this stock is so expensive, and is it worth buying?

Read more »

Dividend Stocks

Passive Income: 3 Top Canadian Stocks to Buy for Monthly Dividends

Companies such as Pembina Pipeline and Killam Apartment REIT pay investors monthly dividends, making them top bets for income-seeking investors.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Stocks for Beginners

TFSA Investors: Top TSX Stocks to Buy With $6,000

Here are two safe, dividend-paying TSX stocks for your long-term portfolio.

Read more »

Gold medal
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Are you looking for growth stocks that could be huge winners in the next decade? Here are three top picks!

Read more »

Retirees sip their morning coffee outside.
Investing

Retirees: How to Make Over $95/Week in Passive Income TAX FREE!

Canadian retirees who are hungry for passive income should look to snag stocks like Sienna Senior Living Inc. (TSX:SIA) in…

Read more »

Man holding magnifying glass over a document
Investing

Where to Invest $500 in the TSX Right Now

Given the massive correction, long-term investors can start buying stocks like Shopify and goeasy to outpace the broader markets by…

Read more »

Aircraft wing plane
Investing

Air Canada Stock Is a Fantastic Deal Right Now

Air Canada (TSX:AC) is a great stock to own, as market fear turns into hope amid falling recession fears.

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern
Investing

Beginner Investors: Get Passive Income by Investing in REITs!

You can get passive income by investing in REITs like Northwest Healthcare Properties REIT (TSX:NWH.UN).

Read more »