If I wasn’t an active investor in the stock market, I’d be seriously bricking it right now.
The paltry interest rates on offer from traditional savings products means that Britons need to be extremely mindful of how to go about saving for retirement. I know that I couldn’t afford to survive solely on the paltry benefit from the State Pension, which currently sits below £170 per week. This would barely cover basic expenditure for most people, and so it’s pretty shocking to find that millions of us are sleepwalking into pensioner poverty by not taking charge of our finances.
It’s time to get busy rather than sit on your hands and get worried, then. Fortunately the London stock market is chock-full of brilliant dividend shares that can help you build a decent income pre- and post-retirement, and so for many of us there’s still opportunity to retire in comfort.
One great way to protect yourself from suffering pensioner poverty is by buying shares in mining giant Polymetal International (LSE: POLY).
There’s plenty of evidence out there to show how investor demand for gold is bubbling higher and higher, a hardly unsurprising phenomenon given the tense geopolitical and macroeconomic environment right now. And the World Bank is just one institution that’s expecting metal purchases to keep improving in the coming years.
In its latest Commodity Market Outlook it estimates that bullion will average $1,310 per ounce in 2019 — up from its current price around $1,280 — before advancing further still next year to average $1,360. In particular, the World Bank cites expectations of “a prolonged pause in interest rate hikes by the US Federal Reserve” as reason to be bullish, and even suggests that rates could be cut in the near future.
Dividends dancing higher
City consensus certainly supports the idea of strong precious metal values in the coming years, and therefore of suggestions that Polymetal’s profits should keep rising.
The digger’s bottom line anticipated to rise by high single digit percentages through to the close of 2020, these cheery broker estimates also helped by the FTSE 250 firm’s efforts to pull cash costs down. What’s more, with Polymetal having recently upgraded gold reserve forecasts for its world-class assets in Russia, the stage looks set for profits to keep rising well into the next decade.
As a consequence, the number-crunchers reckon that dividends should continue to head higher over the next couple of years at least, meaning that share pickers can sink their teeth into giant yields of 5.2% and 5.6% for 2019 and 2020 respectively.
Big yields aren’t the only thing to celebrate at Polymetal, though – its low valuation (illustrated by a forward P/E ratio of 9.6 times) putting the icing on the cake. If you’re seeking a brilliantly valued, big-dividend-paying stock to supplement your income now and in the future, I reckon this gold producer is a terrific buy.
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Royston Wild 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.