Antofagasta is one of the largest copper miners in the world, based in Chile. It has many lucrative assets in the Latin American region.
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As I write, Antofagasta shares are trading for 1,251p. At this time last year, the shares were trading for 22% higher at 1,535p.
I am not concerned by ANTO’s share price drop. Current macroeconomic issues, as well as the volatile nature of commodities have put pressure on the shares.
The best stocks to buy now have risks too
The volatile nature of the commodities market is a big issue for Antofagasta and all commodities firms. Prices and demand are often linked to the world economy and these prices can fluctuate. When not in favour, commodities prices can hamper a stock’s price and drive performance down, which can lead to less than stellar returns and even cancelled dividends.
Antofagasta is currently experiencing production issues in its Chilean mines due to a drought. It said in a recent update these production issues are short term and it has a plan to resolve them. If its plan of a water desalination plant to combat the drought does not work, financials and dividends could be affected.
Why I like Antofagasta
One of Antofagasta’s best characteristics is the quality of its mining assets and the red metals it mines. Demand for red metals is rocketing. As one of the world’s leading copper miners, this demand should boost growth and financials in the years ahead. Copper’s conductivity capability means it is a perfect material for the green revolution ahead. It will be needed in huge quantities to build electric vehicles, charging infrastructure, and wind turbines.
ANTO shares look reasonably priced to me with a price-to-earnings ratio of just 16. It currently sports a dividend yield of just under 4%. Some of my best stocks to buy now have a higher yield but operate in markets with a lot more uncertainty. The commodities market may be volatile but its products are essential to the world’s infrastructure and economy. The yield is still above the FTSE 100 average of 3.2%.
Antofagasta has a good track record of recent and historic performance. I am aware that past performance is not a guarantee of the future, however. Looking back, I can see revenue has grown year on year since 2018. Coming up to date, a Q4 and post-close update revealed full-year guidance had been achieved.
Overall, I do believe that Antofagasta is one of the best stocks for me to buy now to make a passive income. It possesses a good track record of performance and has excellent assets producing materials vital to the growth and expansion of the world economy and infrastructure. The dividend yield may not be the highest, but sometimes, a consistent above-average yield is more enticing to me than a higher volatile yield. I would add the shares to my holdings right now.