May 4, 2023

Glencore: mining business with high dividend

Glencore: mining business with high dividend

By hosting the free Obermatt Coffee Break Zoom chats, we at Obermatt always learn the latest news: on April 20th, Dr. Hermann J. Stern, our CEO, discussed Glencore, a Swiss mining company, as well as its recent attempts to take over Teck Resources. Our guest investors talked about buying it for our Europe Value Wikifolio. Here’s why.

PRO: The following three points speak for a buy:

  1. A good Value rank of 75, meaning that the company’s shares are 75% cheaper than similar companies’. Analysts Opinions is at 95, but with a negative Opinions Change trend at 22. This is probably due to the ongoing battle for taking over Teck Resources, which hasn’t worked out as planned.
  2. High Dividend Yield rank of 95 reflects a high level of dividend the company pays out. Also, while the company is Swiss, they are listed in the UK, which means that there is no tax on the dividends.
  3. Glencore has recently announced they are gradually leaving the coal business: by 2035, they plan to close down at least 12 mines.

CONTRA: The following three points argue against it:

  1. Rather bad Market Pulse and Opinions Change ranks. Glencore’s recent action to buy Teck Resources, a Canadian miner, isn’t going as planned, as the bid had repeatedly been declined by the board and will probably face challenges from the Canadian government as well.
  2. A bad Safety rank of 15.
  3. Mining companies may not always be the perfect choice for investing, as they carry risks like political or environmental issues. Also, it is an expensive industry that doesn’t always guarantee returns.

This is a company with a bright outlook - at least in our opinion, especially taking the ecological aspect into consideration. With the high dividend and the current low stock price, we buy the shares for our Europe Value Wikifolio and Dr. Stern also buys the shares himself.

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