Silver Wheaton Corp. Should Be a Part of Your Portfolio: Here’s Why

With the price of silver on the rise, many investors are shoring up on silver producers like Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW), and here’s why you should, too.

| More on:
The Motley Fool

Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) is the largest silver streaming company in the world, with active operations on three different continents.

The price of silver has steadily risen over the past month, prompting investors to take a look at their portfolios and ensure that they are adequately diversified to this fluctuation. Silver Wheaton is one such company that should be considered for inclusion.

Let’s take a look why Silver Wheaton should be a part of your portfolio.

High margin, low risk

Silver Wheaton is a streamer, which basically means it funds mining companies through an upfront payment in exchange for gold and silver by-product, which Silver Wheaton sells at a significant profit. The negotiated price for the mined metal is often significantly less than the market rate.

This is lower risk than investing in the mining company because there is no need to invest in exploration costs or large capital expenditures.

In terms of those high margins, consider this as an example: the operating cost for silver is currently set near US$4.36 per ounce and US$395 per ounce of gold. Putting this into perspective, an ounce of gold on the market currently goes for near US$1,160. Goldcorp Inc., who is often regarded as one of the most efficient companies in the mining business, has a cost of $656 per ounce.

This margin alone makes Silver Wheaton a lucrative opportunity for investors to explore.

Quarterly results are coming next week

Since the beginning of the month, the stock has appreciated by over 10%. Results for the third quarter will be released November 3, and the consensus among analysts is that Silver Wheaton will beat expectations and will have had a very good quarter; a strong buy rating will be put on the stock.

The company has forecasted that production will hit 43.5 million ounces, and of that number, 38% will be attributed to gold. Last year, the number attributed to gold was significantly higher. With the gold market faring better than silver, better-than-expected revenues attributed to gold are not completely out of the question, especially when compared with the same quarter last year.

Looking to the future, the company forecasts that production could hit upwards of 51 million ounces within the next four years, which will push the price of the stock even higher.

Currently, the stock trades at just under $18, and, in my opinion, can be considered a bargain at the current price, particularly for investors looking to diversify their portfolio with a stock that has huge growth potential in the long term.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of Silver Wheaton. (USA). Silver Wheaton is a recommendation of Stock Advisor Canada.

More on Investing

man in suit looks at a computer with an anxious expression
Dividend Stocks

If I Had to Pick Just One Stock to Hold Forever, This Would Be My Choice

Brookfield Corp (TSX:BN) is a high quality stock.

Read more »

Muscles Drawn On Black board
Dividend Stocks

3 TSX Stocks Yielding Over 5% That Appear to Have the Strength to Back It Up

These three TSX dividend stocks offer yields above 5% and solid fundamentals to match.

Read more »

man gives stopping gesture
Dividend Stocks

The Canadian Stock I Simply Refuse to Sell

Investors should consider building a position over time in this Canadian stock that's a worthy long-term core holding.

Read more »

Couple working on laptops at home and fist bumping
Dividend Stocks

How Does Your TFSA Compare to the $109,000 Milestone?

The iShares S&P/TSX Capped Composite Index Fund (TSX:XIC) is a quality TFSA asset to hold.

Read more »

Forklift in a warehouse
Dividend Stocks

1 Reliable Dividend Stock Worth Buying Even If You Only Have $400 to Invest

Even with $400, you can start building passive income with this dependable TSX stock.

Read more »

running robot changes direction
Dividend Stocks

What’s on Tap for Brookfield Stock in 2026?

Brookfield stock is a good growth idea to consider for long-term investors, given it has multiple megatrends to invest for…

Read more »

Hourglass and stock price chart
Dividend Stocks

5 TSX Dividend Stocks Worth HoldingThrough the Next 10 Years

Here are five TSX dividend stocks that offer stability, income, and long‑term durability for the next decade.

Read more »

people relax on mountain ledge
Dividend Stocks

3 Canadian Dividend Stocks Perfect for Retirees

Here are three of the most defensive dividend stocks Canadian investors should be looking at right now, at least for…

Read more »