Three Dividend-paying Commodity Stocks to Buy

01/10/2025

Three dividend-paying commodity stocks to buy feature a uranium company, a diversified miner and a senior gold mining company.

The three dividend-paying commodity stocks to buy rank as favorites of Wall Street investment firm BofA Global Research. In fact, BofA chose what it considers the leader in its top sub-sector of uranium, its coveted copper company and its preferred precious pick.

If there is one theme relevant to metals and mining (M&M) during the past three years it is that geopolical risk is a key consideration. For the M&M sector, such risk is particularly impactful in the form of import and export bans and tariffs, BofA wrote in a recent research note.

“In 2025, we expect this could notably impact aluminum, rare earths, steel and uranium, but we note that all metals are exposed,” BofA opined. “Increasing numbers of violent conflicts can also be impactful and we are particularly thinking here of gold and uranium mining in West African and the impact of conflict in Myanmar on rare earths production.”

Three Dividend-paying Commodity Stocks to Buy:  CCJ

Cameco (NYSE: CCJ) gained a nod as BofA’s premier pick in its top sub-sector, uranium. BofA wrote that it expects Cameco to gain a lift from growing interest in the nuclear energy and fuel supply chains.

Plus, BofA is bullish on uranium, which is Cameo’s key product. Income investors should appreciate that Cameco has proven to be a dependable dividend payer.

Canadian-based Cameco, of Saskatoon, Saskatchewan, has consistently made dividend payments since 1991. In addition, Cameco has performed two stock splits since it became publicly traded.


Chart courtesy of www.stockcharts.com

 Key Investment Highlights of CCJ

BofA opined that Cameco’s substantial Western-based production is an advantage. Uranium (U₃O₈) production is concentrated with five of the 33 U₃O₈ producers in 2023 responsible for providing 60% of the global total.

The investment firm’s price objective for CCJ is $69.50 (C$97.00) per share, implying 31% (26%) upside. The price objectives are an increase from BofA’s prior estimates of $67.00 and C$94.00.

Mark Skousen, PhD, who heads the TNT Trader advisory service and the Forecasts & Strategies investment newsletter, has recommended Cameco profitably in the past. He helps his TNT Trader subscribers position themselves for an 8.85% gain in just 36 days in 2023, while producing a 65.9% profit in call options during the same time.


Ben Franklin scion Mark Skousen, who heads TNT Trader, Fast Money Alert and Forecasts & Strategies, talks to Paul Dykewicz.

Given the increasing influence of China and Russia on U₃O₈ production from Kazakhstan and Africa, BofA wrote that utilities outside of those two countries will increasingly de-risk their nuclear fuel supply chain by sourcing a greater proportion of its supply from allied countries in the west like Canada.

Cameco's operations include mining, conversion (the production of UF₆), fabrication and reactor development via its 49% interest in Westinghouse Electric, an original equipment manufacturer for nuclear reactors. CCJ also has indirect exposure to enrichment via its 49% interest in Global Laser Enrichment, a developer of next-generation enrichment technology that recently secured funding from the Department of Energy.

In addition, BofA wrote that CCJ's diversification is especially important given current market conditions where conversion and enrichment capacity are in short supply. Plus, strengthening electrical energy demand growth, trade, global nuclear restarts, nuclear new builds, continued mine supply disruptions, and the return of utility buying are key themes to watch in 2025, BofA continued.

Three Dividend-paying Commodity Stocks to Buy:  IVN

For investors interested in gaining exposure to copper, BofA recommends Ivanhoe Mines (IVN), of Vancouver, Canada. The mining company also offers exposure to zinc, nickel, palladium, platinum, rhodium and other green metals.

“For IVN, we see peer-leading production growth, a competitive cost profile and copper exploration upside,” BofA wrote in a recent research note.

Ivanhoe Mines announced on Friday, Jan. 10, that it has commenced an offering of US$600 million senior notes due 2030. The notes will be senior unsecured obligations of the company and will be guaranteed on a senior basis by certain Ivanhoe subsidiaries.

In connection with the offering, Ivanhoe Mines entered into a US$120.0 million revolving credit facility agreement dated December 22, 2024. The gross proceeds of the offering of the notes will be used for general corporate purposes, including capital expenditure associated with expansion of the company’s projects, and the payment of certain fees and expenses related to the offering.


Chart courtesy of www.stockcharts.com

Three Dividend-paying Commodity Stocks to Buy:  AEM

In precious metals, BofA is recommending Toronto-based Agnico Eagle Mines (NYSE: AEM). BofA praised the track record of AEM’s management to meet or exceed its financial targets, pursue its suite of attractive growth projects and tap into its substantial “exploration upside potential.”

Agnico Eagle Mines claims it is third-largest gold producer in the world, scooping up precious metals from operations in Canada, Australia, Finland and Mexico. Founded in 1957, Agnico Eagle Mines has consistently declared a cash dividend every year since 1983.

BofA has set a $116 per share price objective on Agnico Eagle, based on the stock trading at 2.5x times the investment firms’ estimated net asset value (NAV), plus a mining asset discounted cash flow (DCF) using a 5% weighted average cost of capital (WACC).

“Historically, North American gold producers have traded between one and two times NAV, with 1.75-2.0 times being accorded to the organically growth-oriented gold producers such as AEM,” BofA wrote.

Skousen recommended AEM in 2024 profitably for his Fast Money Alert subscribers in both in the stock and call options. During a 69-day holding period, the share price jumped 21.03%, while the options soared 144.29%.

Risks of AEM not meeting BofA’s price objective include commodity price weakness, any inability to secure financing for expansion or development projects, unforeseen operating problems and political risk in the countries where the company operates. Potential outperformance could come from commodity price strength, better-than-forecast operating results and favorable changes in the political environment in the regions where it operates, BofA wrote.


Chart courtesy of www.stockcharts.com

Three Dividend-paying Commodity Stocks to Buy: Outlook

BofA expects geopolitical tension, foreign exchange (FX) volatility and resource nationalism to feature in 2025. The latter issue could strengthen the business outlook for miners to serve their domestic markets and nearby nations.

The three dividend-paying commodity stocks to buy rank as clear favorites of BofA Global Research. Investors interest in the stocks may find a recent pullback in prices offers a tempting time to purchase.

Sincerely,

Paul Dykewicz, Editor
DividendInvestor.com