Franco-Nevada (TSX: FNV)(NYSE: FNV) is based in Toronto. The company is a gold-focused royalty mining company. Franco-Nevada invests in gold, silver, platinum group metals, other mining assets, and energy. Most Franco-Nevada’s assets (63%) are in gold companies.
The stock pays a dividend of 1.04% and has a market capitalization of $23.68 billion. In 2018, Franco-Nevada had $653 million in revenues.
Gold streaming is a unique way to protect against a recession. Gold streaming allows investors to profit from rising gold prices without the risk of one vein running out, production problems, or confiscation by a government. In the event of personal gold holdings or a gold mine confiscation, an investor in Franco-Nevada would make money because the global price of gold would increase.
Franco-Nevada is insulated from political turmoil in one country because the company owns global assets.
There is a lot of economic uncertainty in global markets. Denmark is currently experiencing negative interest rates. On July 3, 2019, the Danish government sold a 10-year bond at -0.32%. This means investors will knowingly lose -0.32% on the money they placed in addition to any purchasing power depreciation that may be experienced over the life of the bond.
Switzerland, Japan, the Eurozone, and Sweden all have negative interest rates at their central banks.
If investors cannot gain returns from traditional safe havens such as government bonds, they will turn to invest in another historical store of wealth: gold.
By 2021, the projected price for one ounce of gold will be US$2,000. That is a 25% increase from the current price.
It is essential to keep in mind that Franco-Nevada also streams silver and platinum assets. Silver is a store of wealth and an industrial metal. Only 25% of silver mined is used for jewelry and utensils. Silver demand was up 4% in 2018, and projections for demand remain strong given silver is a component used in the manufacturing of solar panels and electronics. Silver prices are expected to increase 21% by 2020.
All these indicators bode well for stock price increases for Franco-Nevada.
Waste Connections (TSX: WCN)(NYSE: WCN) is my second top pick for a wealthy retirement. The Canadian headquarters are in Vaughn, Ontario. The company provides waste removal and disposal, recycling, and composting services. The stock has a five-year total return of 199.45%. In 2018, the company had US$4.92 billion in revenues.
Waste Connections is the third-largest solid waste management company in North America and has multiple revenue streams.
In 2015, the company opened the largest renewable natural gas facility in Canada in Terrebonne, Québec. The facility converts gas from its landfill into natural gas and feeds the gas into the TransCanada pipeline network.
The company also recycles industrial materials such as plastics, oil, and chemicals.
Opportunities
On January 17, 2019, CBC reported more than half of all food in Canada is lost or wasted. This presents a significant opportunity for Waste Connections to expand the company’s natural gas operations.
In 2018, China stopped importing the world’s recycling. China’s refusal to take on recyclables has plunged the recycling industry into chaos. That means the waste is staying in Canada and it’s up to Canadians to figure out what to do with it. One such initiative is the National Zero Waste Council in which Waste Connections can leverage the company’s deep ties with municipalities to forge partnerships with industry.
Canada is hosting the 2020 Circular Economy Forum. A circular economy means existing non-used items are recycled into other resources. The economic benefits for the transition to a circular economy are estimated to be $4.5 trillion. Waste Connections needs to be part of that conversation.
With 66 recycling facilities throughout North America, Waste Connections has the infrastructure to accommodate growing demand for recycled goods.
Revenues for Q2 2019 were up 10.5% compared to Q2 2018, and the company had 19.3% of revenue in free cash flow. This company is on solid ground.
