This big 8% dividend makes me want to buy Glencore shares

Glencore shares have been up and down over the past decade, and the dividend has done the same. But right now, I like what I see.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Glencore (LSE: GLEN) share price had been dropping in 2023, after a strong 2022. But it’s up a bit in the past few weeks, as commodity stocks have gained.

It’s a cyclical business, and it’s very much tied to the state of the world economy. And that’s not too great right now. So maybe we’ll see another year or two of weakness.

But there’s a few things about Glencore that I like. And they’re enough to put it on my list of candidates to buy in 2023.

Big yield

The main one is that fat 8% dividend yield. That’s the forecast this year, and it’s about the same for next year too.

Now, some miners have cut their dividends in the past 10 years.

Glencore’s has dipped a few times, the last time in 2020. So it’s not one for steady, unchanging income, for sure. But forecast earnings should be enough to cover the cash for the next few years.

And a low price-to-earnings (P/E) ratio of only around 6.5 also makes me think the shares are cheap.


Analysts are bullish on the stock too, and there’s a strong buy consensus in the City right now. We do need to be a bit wary of that, though.

I’ve seen stocks tipped as buys just because the trend is going that way. Still, it’s another of the small things that can add up to make a stock look like a buy.

Commodity prices have slipped a bit since early last year. And some, like iron ore, are way below their early 2021 levels.

Overall, though, prices have held up quite well over the past five years.

But I just don’t think they yet reflect the demand we’re likely to see in the coming decade and more.

Short term

In the shorter term, demand could fall. China, for example, is expected to cut its domestic steel production this year, for the third year in a row. I guess that’s behind the iron ore dip.

So yes, I see a real danger that the Glencore share price could wobble a bit over the next year or more.

And if global demand doesn’t pick up soon, I can even see the dividend being cut. Again.

But for the moment, the firm seems to have lots of spare capital. At FY results time in February, the board announced a new $1.5bn share buyback.

And for the 2022 year, net debt fell to just $75m. For a company with a market cap of nearly £60bn, I reckon that’s as good as zero. Right now, liquidity seems to be overflowing.


I don’t think Glencore is a good one for those who don’t really like volatility. The share price has been erratic over the years, trailing the FTSE 100 a lot of the time.

I also don’t think it’s best for steady income from dividends, as they’ve been up and down over the years too.

But for someone like me, who reinvests dividends for the long term, I think Glencore could be a buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Should I buy more Rolls-Royce shares near 500p?

This investor is wondering whether to buy more Rolls-Royce shares this summer or to just stick with those he already…

Read more »

Investing Articles

After its big fall, is the National Grid share price dirt cheap now?

The National Grid share price fell sharply in reponse to new rights issue plans. But is it an even better…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Starting in June, I’d invest £1,000 a month to aim for a £102,000 second income in retirement

This author highlights a less well-known FTSE 100 stock that could help his portfolio generate a very big second income…

Read more »

Investing Articles

Down 47% in 5 years, is the IAG share price due a bounce?

Many companies in the travel sector have seen fierce rallies since 2020. But with the IAG share price still down…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Despite its drop, I reckon this is one of the best FTSE 100 stocks to buy and hold!

The FTSE 100 has been climbing in 2024 but this favourite of our writer's has been falling. Despite this, she’s…

Read more »

Investing Articles

AI stocks vs EV shares; which is the best sector for me to invest in?

Jon Smith considers the recent rally in AI stocks and weighs up whether to allocate more money there versus EV…

Read more »

A graph made of neon tubes in a room
Investing Articles

Do Greggs shares have even more growth ahead?

Greggs shares have seen some solid growth in the last few months, as the economy shows positive signs. But is…

Read more »

Investing For Beginners

How I’d aim to grow my Stocks & Shares ISA from £20k to £1m

Jon Smith explains how diversification and focusing on sectors for the future can help grow his Stocks and Shares ISA.

Read more »